PRIVATE BUSINESS

Mersey Tunnels Bill (By  Order)

Order for Second Reading read.
	To be read a Second time on Wednesday 15 May.

Oral Answers to Questions

WALES

The Secretary of State was asked—

Tuberculosis (Cattle)

Stephen O'Brien: What recent discussions he has had on the risk of the further spread of tuberculosis in cattle to England.

Don Touhig: My right hon. Friend the Secretary of State and I regularly meet the Assembly Rural Affairs Minister to discuss a wide range of issues. Policy responsibility for bovine TB in Wales is a matter for my colleagues in the National Assembly, while in England it is the responsibility of Ministers in the Department for Environment, Food and Rural Affairs. Ministers and officials in the Assembly and the Department for Environment, Food and Rural Affairs maintain close contact on the issue.

Stephen O'Brien: With more than 6,000 cattle slaughtered in Britain in 2001, 2,000 of which were in Wales, this is a desperately serious issue for the dairy and cattle farmers of my Cheshire constituency, who are in the front line of the battle against the spread of bovine TB from across the border in Wales and the west midlands. Even the Labour-dominated Environment, Food and Rural Affairs Committee has called for Government action. Should not the Minister now stop dithering and put in the resources necessary to combat the massive backlog of TB testing in Wales and England, following the suspension of the badger culling trials because of the disastrous foot and mouth epidemic? Why are the Government weak-kneed and complacent about the issue? They should resume the badger culling trials, vaccination research and the transmission tests.

Don Touhig: The hon. Gentleman uses 20 words when he could manage with one. Bovine TB is just as likely to spread into Wales from England. Indeed, in Montgomeryshire, the type of TB commonly associated with Herefordshire, Worcestershire, Shropshire and west Gloucestershire is prevalent. Bovine TB is a problem and it has been spreading. My colleagues in the Assembly and in DEFRA are taking the issue seriously, but it is important to stress that it does not pose the same contagious problem as foot and mouth disease. Resources are being put in to catch up with the backlog that the hon. Gentleman mentions, because the veterinary service had to be used to cope with the more immediate problem of foot and mouth. Measures have been put in place to restrict cattle movements and cattle on farms that are being restocked following foot and mouth culling are being tested. Key measures are in place to speed up matters, but it will take time. I admit to the hon. Gentleman that the problem will not be put right overnight.

Huw Edwards: There has been a serious outbreak of bovine TB in the Raglan and Llantrisant areas of my constituency and certain farmers have had their stock culled, while others are unable to trade or face serious movement restrictions on their livestock. Will my hon. Friend work with his colleagues in DEFRA and the National Assembly to do everything possible to halt the spread of bovine TB?

Don Touhig: Yes, I will certainly do that, and I am aware of the problem in Raglan. Indeed, we have seen recent outbreaks in south Ceredigion, central Carmarthenshire, Montgomery and Denbigh. As I said earlier, resources are being made available to speed up the testing of cattle and I can assure my hon. Friend that colleagues in the Assembly and in DEFRA are wasting no time in doing everything that they can—including providing the resources—to tackle the problem.

Greg Knight: The problem of bovine TB is a worrying issue for which the Minister has some responsibility. Is not it the case that Ministers have kicked farmers in the teeth by refusing to claim money from the European Union that would be a great help in addressing the problem? Why have the Government rejected the EU agrimoney package, which amounts to some £72 million? Does the Minister realise that farmers are under siege from all directions, including lower prices, bovine TB and the after-effects of foot and mouth? Now, thanks to his actions, they will be denied European help. The real reason the Government have refused the money is that the Treasury would have to part-finance it. Will the Minister see the Chancellor of the Exchequer and tell him to get out of his office in Whitehall, go to Wales, meet some Welsh farmers and apologise to them?

Don Touhig: The right hon. Gentleman is right to underline the concern that we all feel about bovine TB and the impact that foot and mouth disease and other problems have had on the farming industry in the past 12 months. However, I can tell the right hon. Gentleman that the European Commission has yet to confirm how much agrimonetary compensation will be made available for the livestock sector. When the amounts have been confirmed, we will consider appropriate cases for payment. Spending on tackling the problem in Wales is now running at about £1.6 million. That shows that the Government are putting in resources to cope with the problem. As soon as we get information from the European Commission, we will consider where it might be appropriate to add further compensation.

Paul Flynn: Is my hon. Friend aware that the Department for Environment, Food and Rural Affairs told me today that a number of instances of TB have been traced to increased movements of animals around the country as a result of restocking and the reopening of animal marts? Is not it likely that badgers are not responsible for the new increase in cases as they stay in single, small habitats, whereas animals are being moved the length and breadth of the country? Should not we return to the position of a few months ago, when the numbers of animal movements were restricted? At that time, farmers were successfully and cheaply selling animals over the internet and by other means. Such methods did not cause suffering to animals, and avoided the extra risk of infection involved in going to animal markets.

Don Touhig: I can tell my hon. Friend that I am given to understand that the most recent outbreak in Denbigh has been among cattle that have just been moved into the area. The Krebs badger culling trials started in 1998, and have been continuing. We expect the results in about 2004. It will then be up to the Government to consider whether those results prove that badgers have been a cause of bovine TB. There is a strong view in the farming community that badgers are responsible, but there are those in animal welfare groups who insist that they are not. Until we have substantive evidence, I cannot comment further.

Mr. Speaker: Order. The House is getting very noisy. It is only fair to the Minister and those asking the questions that they be heard.

Health Provision

Bill Wiggin: If he will make a statement on ministerial discussions on the effect of the Budget on health provision in Wales.

Paul Murphy: I have spoken with the Assembly's Minister for Health and Social Services about the increase to the Welsh block consequential on the increases on Government spending on health announced in the recent Budget. The resulting amount for the block for 2007–08 is some £1.8 billion over the next five years, and I am pleased to say that the Assembly intends to spend the full amount on health in Wales.

Bill Wiggin: On 10 April—Hansard, volume 382, columns 3-4—the Secretary of State kindly agreed to ensure that the Minister for Health and Social Services in Wales was aware of the terrible bed shortages in Hereford hospital. Will the right hon. Gentleman say how he got on in those discussions?

Paul Murphy: We are still in correspondence, obviously, with the Welsh Minister for Health and Social Services. The hon. Gentleman will know that the movement of patients, especially across mid-Wales, to hospitals in Hereford, Shrewsbury and elsewhere is very important. Arrangements are in place to deal with such matters. The hon. Gentleman may rest assured that, when we receive the result of our correspondence, I shall be back in touch with him.

Jackie Lawrence: I am sure that my right hon. Friend will agree that, in many instances, Wales leads the way. However, given the Budget announcements on health, will he urge the Welsh Minister for Health and Social Services to follow the English example and have independent audit and inspection for health services in Wales to ensure complete transparency?

Paul Murphy: In both Wales and England, we understand the importance of ensuring that investment goes along with reform. We cannot achieve improvement in the health service unless those two factors go together. I have talked to the First Minister about such matters, and my hon. Friend the Under-Secretary of State for Wales has also talked to the Minister for Health and Social Services. The Assembly Cabinet and the First Minister are, in principle, very content with and relaxed about the idea of ensuring that there should be a proper audit regime. That regime should be proactive, and not necessarily retrospective on its own. These matters will be discussed in the next few months when we deal with the legislation framing the bodies involved, but my hon. Friend may rest assured that the principles underlying the reforms of my right hon. Friend the Secretary of State for Health are the same as those that underlie what the Assembly wishes to do.

Elfyn Llwyd: Will the Secretary of State say what is the logic in devolving health to the National Assembly for Wales and establishing an audit body that is responsible to this House?

Paul Murphy: I would have thought that the most important thing is that the patients come first in Wales or England. There is nothing wrong with people in Wales looking at best practice in health trusts in England, comparing notes and seeing what happens. It would be foolish if Wales, a country of 3 million people, did not look across the border to England to see what best practice occurs there. The hon. Gentleman is aware that in other respects, the Assembly is free to do what it wishes. At the end of the day, it is up to the Assembly to decide how best to implement health reform in Wales, but when it sees sensible reform here in England, it should include that as well.

Ian Lucas: Is my right hon. Friend aware that some excellent health care is provided to my constituents by, for example, the Countess of Chester hospital in Chester and the Robert Jones and Agnes Hunt Orthopaedic and District hospital in Gobowen? The sensible way ahead is for us to work together with English health authorities to bring about the best possible provision of care for my constituents.

Paul Murphy: I was conscious of that in my reply to the hon. Member for Leominster (Mr. Wiggin), when I said the same thing. There is an important link between English health trusts on the border and Welsh health trusts. It is important that we learn from each other, and that applies in north Wales as much as in south Wales.

Nigel Evans: In recent days, we have learned the shocking news that patients heading for the accident and emergency unit at the Prince Philip hospital in Llanelli after 5 o'clock were diverted to other hospitals at Swansea and Carmarthen, miles away, because of a lack of anaesthetists, and that patients in need of life-saving pacemaker operations have to wait longer in Wales than those with a similar need in Poland because of a lack of heart specialists in Wales. Are the Government to blame or is the Welsh Assembly?

Paul Murphy: I would have thought that the Conservative party was to blame as well. [Interruption.] Tory Members hold up five fingers, but it was 20 years of Tory Government that led to the underfunding of the national health service.
	Of course the hon. Gentleman is right to point, as the Western Mail did yesterday, to those two distressing stories. Of course it is important to address those issues. As we heard in the previous exchange, health matters are devolved to the National Assembly for Wales, which has to deal with them as it thinks best. However, things are not as bad as the hon. Gentleman says. Only a week or two ago, the Assembly met its target that no patient should wait more than 12 months for heart surgery. More than 400 extra doctors and 500 extra nurses are being trained this year, and by 2004, more than 4,300 nurses, midwives and health visitors will be coming out of training. Of course it will take time. The Government have given the National Assembly for Wales the biggest increase ever in public spending on the health service. The Assembly itself will carry out reforms. Between the Assembly and the Government, we will have the best health service in the world.

Nigel Evans: Part of the problem is that we have heard all this before. When the right hon. Member for Holborn and St. Pancras (Mr. Dobson) was Secretary of State for Health, he said:
	"waiting lists are rather like a supertanker. It will take time to slow them down, to stop them, to turn them round, but turn them round we will."—[Official Report, 17 November 1997; Vol. 301, c.35.]
	Since then, the tanker has sunk. In Wales, up to March 2002, the number of patients waiting between 12 and 18 months for a first out-patient appointment had risen by 69 per cent., the number of those waiting more than 18 months is up by 118 per cent and there is a nine-year waiting list for children needing non-cosmetic plastic surgery, yet Government expenditure on the NHS in Wales is £102 more per person than in England. When will the Government ditch the spin, realise that patients will get treatment not through promises but through action, and deliver on an improved health service for the people of Wales?

Paul Murphy: The hon. Gentleman knows that the national health service in Wales will receive an extra £2 billion in five years' time. At present, the Assembly spends just over £3 billion on the health service. In five years' time, the figure will be nearly £6 billion. Of course we are putting the investment in, but the hon. Gentleman knows that to ensure that we achieve delivery and improvement, we have to reform the health service. Yet he and his colleagues voted against the reforms of the national health service in Wales in this Chamber some months ago. He cannot have it both ways. When will he tell us what proposals his party has to improve the health service in Wales and the rest of the United Kingdom?

Aerospace Industry

Ben Chapman: When he last had discussions with the First Secretary of the National Assembly for Wales on the aerospace industry in north Wales.

Don Touhig: My right hon. Friend the Secretary of State and I regularly meet the First Minister to discuss a wide range of issues, including the aerospace industry in Wales.
	As I said in reply to a similar question from my hon. Friend on 10 April, I recognise that prospects for the aerospace industry in north Wales and my hon. Friend's constituency are underpinned by the continued success of Airbus at Broughton. I continue to believe that the good working relationship between the management and trade unions at Broughton are vital to the success of that project.

Ben Chapman: My hon. Friend will appreciate that Airbus at Broughton, where many of my constituents work, along with other parts of the aerospace industry, could have faced problematic times post-11 September. Can he assure me that he is doing all that he can to provide continuing long-term support to the site and to the industry, and that he will bring pressure to bear on the Ministry of Defence to advance the orders for the A340 air tanker to bring further work to the site?

Don Touhig: I know well my hon. Friend's commitment to the success of Broughton, and I am sure that he will welcome the good news of orders for the A340 from South African Airways and from Virgin. I take note of his point about the Ministry of Defence and the A340 air tanker, and I shall bring that to the attention of my right hon. Friend the Secretary of State for Defence.

Lembit �pik: Is the Minister aware of the creation on 26 March this year of Aerospace Wales, which represents the 2 billion a year turnover and 20,000 jobs that the aerospace industry in Wales provides? Would he be willing to meet a cross-party delegation of MPs, Assembly Members and interested parties to talk about developing a coherent strategy and creating a brand for Aerospace Wales, and to discuss a coherent strategy for airports in Wales, which are badly in need of development?

Don Touhig: As a Welsh Member of Parliament, I am conscious of the important impact of the aerospace industry throughout Wales. Indeed, it is a very big employer in my constituency and in adjoining constituencies. I would be happy to meet him and the group that he mentions, because it is important that we are all seen to be pulling together to ensure, after 11 September, that the aerospace industry is a success story. We have a great story to tell in Wales and a good work force. Investment is going in, and let us all pull together to make sure that the industry succeeds.

John Smith: I, too, welcome the recent launch of Aerospace Wales in my constituency, which combines the manufacturing base in the north with the repair and servicing cluster of industries in the south. Does my hon. Friend agree that this is the time to invest in aerospace training skills in colleges such as Barry college in my constituency, not to cut back on capacity?

Don Touhig: I know of my hon. Friend's support for the aerospace industry, and I agree with the point that he makes. I recently met in London a deputation of trade unionists from my area. They are passionately in favour of their company investing in reskilling and upskilling the work force so that it can meet the growing technological demands that the industry will face. I shall certainly do all that I can, working with colleagues in the Assembly and with Ministers to ensure that that is a success, and I am sure that my hon. Friend's college in Barry will make a contribution to that.

Nicholas Winterton: Does the Minister accept that the aerospace industry is not only United Kingdom-wide, but an international business? BAE Systems, the main player in the aerospace industry in the UK, is internationally based.
	Although I agree with the hon. Member for Wirral, South (Mr. Chapman) that in the present difficult climate the Ministry of Defence should, where possible, develop projects to guarantee a skilled work force, does the Minister accept that there is a duty and responsibility on Government to minimise additional business costs?

Don Touhig: On the hon. Gentleman's last point, the Government stand on their record, which is unparalleled.
	I agree that it is important for all arms of Government, especially the Ministry of Defence, to play a part. I have no doubt that it will do so. Certainly, in Wales the MOD has played an important role in the development of the aerospace industry, especially as regards recent announcements about RAF St. Athan. This is an issue that can unite all hon. Members, and we are all working together to the same end.

Economy

Wayne David: What discussions he has had with the Treasury as to the likely impact of measures recently announced in the Budget to improve the performance of the Welsh economy.

Paul Murphy: I have regular discussions with my right hon. Friend the Chancellor on a range of issues, including, of course, the Welsh economy. The Budget included a number of measures that will give a boost to the Welsh economy, including a 0 per cent. corporation tax starting rate, a 1 per cent. corporation tax cut for all small firms, research and development tax breaks for larger firms, further simplification of VAT for small firms and other modernising tax reforms. I am also pleased to note that Wales is posting the fastest fall in unemployment of any region or country in the United Kingdom.

Wayne David: I thank my right hon. Friend for his reply. There can be no doubt that the Budget has been a powerful stimulus to the development of the Welsh economy. Unemployment in Wales is indeed at an all-time low, but there are still areas of high unemployment, especially at the heads of the valleys in south Wales. Will my right hon. Friend give an indication and a commitment that the Government will continue to tackle those high rates of unemployment?

Paul Murphy: Of course I shall give that commitment. I represent a valley constituency myself and understand what my hon. Friend is saying. He is aware that the Assembly, as well as the Government, is doing its best to regenerate our south Wales valleys. In his constituency, for example, there have been 18 new inward investment projects, creating more than 1,000 jobs and safeguarding more than 100 jobs. The unemployment rate in his constituency has dropped, which is part of the general picture in Wales and means that unemployment in Wales is the lowest that it has been for 27 years[Interruption.]

Mr. Speaker: Order. I appeal again to the House to come to order. It is far too noisy.

Mark Prisk: Last Thursday, the Secretary of State told the House that inward investment was vital to the performance of the economy in Wales. Would he, therefore, care to comment on the fact that, as a proportion of the UK total, inward investment in Wales has collapsed from 19 per cent. in 1991 to only 11 per cent. last year? What has gone wrong?

Paul Murphy: I remember that the hon. Gentleman took part in the debate on Welsh matters last Thursday. He rightly pointed out the importance of indigenous firms and how they can help to regenerate the Welsh economy. However, I also point out to him that, this very year, the Assembly has the highest level of regional selective assistance grants for seven years; 130 million of RSA has gone into various companies; and 267 investment projects in Wales have benefited from that. There is a combination of two things: we need inward investment and we need to help indigenous industry. That is why, as I said earlier, more people are in work in Wales than at this time last year, despite the loss of manufacturing jobs.

Llew Smith: The Secretary of State will be aware that in Blaenau Gwent we have some of the greatest poverty in Wales, with some of the highest unemployment and the lowest wages. He will also be aware that, in the next few weeks, Corus will finally close. When he meets the First Secretary will he ensure that the public moneys that he has just mentioned, and which are so generous this year, are directed to those areas in Wales where poverty is greatest, and are not lost, as is often the case, in Cardiff in general and Cardiff bay in particular?

Paul Murphy: I am very much aware of my hon. Friend's views on these matters. I believe that we can do both in Wales: we can see that the regeneration of our capital city goes ahead, while ensuring that we put proper resources into Blaenau Gwent and the other south Wales valleys. Only a Labour Government, working with a Labour Assembly, can do that.

Student Debt

Hugo Swire: If he will make a statement on student debt in Wales.

Don Touhig: My right hon. Friend the Secretary of State and I meet regularly with colleagues to discuss a range of issues, including student finance.

Hugo Swire: Student debt has doubled since Labour came to power in Wales. Since the establishment of the Welsh Assembly, and with the support of the Liberal Democrats, the situation has deteriorated further. Is that appalling record the fault of the Welsh Assembly or is it something for which the Government are prepared to take the blame?

Don Touhig: The hon. Gentleman must have forgotten that when his party was in power there was a considerable problem of student debt. We have reformed the whole system of student loans, making it much easier for students to access funds, and we have related the repayment to their earnings. The Government, working in partnership with the National Assembly, are aiming at their target, which is to increase the number of people entering higher education. The Government whom the hon. Gentleman supported never succeeded in doing that; we are going to achieve it. We will achieve it quite soon.

PRIME MINISTER

The Prime Minister was asked

Middle East

Jeremy Corbyn: What recent discussions he has had with the Prime Minister of Israel.

Tony Blair: I have had many discussions with Prime Minister Sharon over the past weeks and months.

Jeremy Corbyn: I am sure that the Prime Minister would join me in condemning both the suicide bombing attacks that have taken place on Israel and the attacks on the Palestinian people by the Israeli armed forces. Will he, however, make it clear to Prime Minister Sharon that the only way to bring about a long-term, realistic peace in the region is for Israel to withdraw from Palestine; to accept United Nations resolutions on Palestinian self-determination; to allow an independent United Nations investigation into the massacres of Jenin; and to recognise a Palestinian state? Until that position has been achieved, will my right hon. Friend ensure that the British Government cease all arms sales to Israel?

Tony Blair: I am sure that the whole House would like to join me in condemning totally the appalling outrage that has happened in Israel, in which 16 innocent people have lost their lives. That takes the total, incidentally, of Israeli civilians who have been killed since the beginning of March to 100. And for those people who sometimes do not understand the strength and depth of the feeling in Israel, I hope that this latest outrage reminds them of the precise extent of the pressure that Israel and Israeli people are under. At the same time, of course it is right, as my hon. Friend points out, that many Palestiniansmany hundreds of Palestinianstoo have lost their lives
	There has been a strong statement of condemnation from the Palestinian Authority about this latest terrorist attack. But it needs more than simply a strong statement. There must also be action. And I want to make it clear that, as far as we are concerned, we the British Governmentand, I hope, the wider international communityare prepared to work with the Palestinian Authority in any way that is possible, in order to ensure that they have the proper security apparatus that they require and that that is properly enforced throughout the Palestinian Authority, because we cannot have a situation where every time it seems as if there is some hope of political progress, that progress is immediately derailed by a terrorist attack.
	Unless the fate of any political process is to be in the hands of the latest suicide bomber, we must do more than ensure that a political process can be restarted properly; the most immediate task now is to ensure that we have in place proper security measures within the Palestinian Authority that allow those in Israel some confidence that, if they start to talk, they will not carry on suffering these appalling outrages, for which there can be absolutely no justification whatever.

John Butterfill: Will the right hon. Gentleman of course express, when he next meets Mr. Sharon, the sympathy of the entire House for the latest outrage that has been perpetrated in Israel? Will the right hon. Gentleman also say how pleased we are that Mr. Sharon does seem to be moving towards some dialogue, and that we all hope that that will lead to peace within Israel?
	However, can the right hon. Gentleman confirm whether he has seen copies of the documents that were captured by the Israelis in Ramallah, which clearly appear to implicate Mr. Arafat himself in the funding and organisation of these terrorist atrocities? Does the right hon. Gentleman think that, on that basis, Mr. Arafat can form part of any further discussions?

Tony Blair: We will of course study the documentation that has been provided by the Israeli Government. I believe, though, that what is important is that we have some means of ensuring that the claims about the Palestinian Authority and their complicity in acts of terrorism are properly adjudicated upon, so that we do not have claim and counter-claim every time one of these terrorist attacks occurs.
	There is no doubt at all, therefore, that the immediate taskbecause otherwise I believe that political progress is impossibleis to try to find some way of ensuring that there is a verifiable security apparatus in place inside the Palestinian Authority and their territories. If that cannot be done, it is very difficult for Israel to negotiate, if it believes that Chairman Arafat and the Palestinian Authority are indeed complicit in terrorism. On the other hand, if the condemnation by the Palestinian Authority is genuine, we have indeed a true tragedy, where we cannot make any political progress, and where each time one of these terrorist attacks occurs, whatever progress there is immediately dissipates. We have to find a way through that.
	In relation to the lifting of the siege of Ramallah, we have tried as a Government to play our part in providing some means of ensuring that, if people are alleged terrorists, they are properly and verifiably under lock and key. But we need to make sure that we build on that and try to put the same type of process in place right across the Palestinian Authority; otherwise we will be faced with this situation time and again. In the end, the casualties are clear: there are innocent Israeli civilians dying in very large number, and there are innocent Palestinian civilians dying as well. It is a tragedy that is now pretty much a catastrophe, not just for that region, but for the world.

Engagements

Chris Mullin: If he will list his official engagements for Wednesday 8 May.

Tony Blair: This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further meetings later today.

Chris Mullin: May I draw the Prime Minister's attention to the case of a 14-year-old boy in Sunderland who was shot in the back last week by an out-of-control youth with an air weapon and to the fact that the doctors are unable to remove the pellet from his back? Is my right hon. Friend aware that that is only the latest in a series of incidents involving air weapons and out-of-control youths? Does he think that the time has come for us to take a look at the regulation of air weapons?

Tony Blair: I recognise my hon. Friend's interest in this area and his work in it, too. I should perhaps point out that, under the Firearms Act, it is already an offence to give an air weapon to a person under 14 or to sell one to a person under 17. It is also an offence for anyone to have a loaded air weapon in public. As my hon. Friend will know, the British Association for Shooting and Conservation has, in conjunction with the police, launched its own campaign on air weapon safety. However, I agree with my hon. Friend that this is a serious and growing problem, and in the context of doing everything we can to bear down on the issue of street crime and antisocial behaviour, we will certainly look urgently to see what more is required.

Iain Duncan Smith: May I join the Prime Minister unequivocally in his comments on the tragedy today and condemn those who have perpetrated that outrage? May I also join him, without any gap whatever, in saying that the important need is for short-term security for those in Israel and for a settlement at the earliest opportunity?
	On a more domestic issue, though, the Transport Secretary, with characteristic candour, writing a little while ago, said to his constituents that, among other things,
	an honest, open style have made Stephen Byers a respected representative.
	Does the Prime Minister agree with that characteristic honesty?

Tony Blair: Of course I do.

Iain Duncan Smith: Well, the Prime Minister might like to cast his mind back to February, when the Transport Secretary made a statement to the House. I remind him that it was entitled, Resignation of Martin Sixsmith. Only yesterday, the Transport Secretary's own Department issued a statement saying,
	The Department accept that Martin Sixsmith . . . did not resign.
	Why is the Transport Secretary therefore still in his job?

Tony Blair: Because I do not accept that people were misled at all. [Interruption.] The facts were set out in Sir Richard Mottram's statement of 25 February, to which the Secretary of State referred in his statement of 26 February. It was clear that the Secretary of State had been told that Mr. Sixsmith had agreed to resign. It was equally clear that Mr. Sixsmith disputed that he had resigned. Therefore, the parties were not in agreement. Therefore, there had to be a negotiation. All of that was actually set out in Sir Richard's statement of 25 February and repeated by the Secretary of State on 26 February. Terms have now been agreed, and he has indeed departed.

Iain Duncan Smith: Oh what a wondrous web we weave when first we practise to deceive. Let me remind the Prime Minister what the Transport Secretary actually said:
	The statement that I have made . . . reflects accurately the sequence of events that have taken place.
	He also said:
	I will be held to account for the comments that I make in the House.[Official Report, 26 February 2002; Vol. 380, c. 574.]
	We now learn that Mr. Sixsmith did not resign; he remained a salaried employee in the Department for Transport, Local Government and the Regions. The taxpayer will have to pay 200,000 to secure his release. Before he was elected, the Prime Minister said, No more lies. Why has he not dismissed the Transport Secretary?

Tony Blair: For the simple reason that, if the right hon. Gentleman looks at the agreed statement, what blows a hole in his argument is that it makes it clear that any dispute with Mr. Sixsmith was in good faith. The right hon. Gentleman cannot rely on the agreed statement between the Department and Mr. Sixsmith on the one hand and dispute it on the other. It had been agreed in good faith, and, as the Secretary of State made clear on 26 February, Mr. Sixsmith was to leave on terms to be agreed. Those terms have now been agreed, and the truthful point is that the reason why the right hon. Gentleman wants to raise all these issues is that he has nothing to say about the serious issues of the day.

Iain Duncan Smith: I really do think that the Prime Minister is keeping very bad company these days. Most people out there know that they would have been dismissed from their jobs for half of what the Transport Secretary has done. There is a different rule for this Government, however. I remind the Prime Minister that he said:
	This is your chance to get rid of the . . . lies, broken promises and sleaze . . . Please vote for Stephen Byers on 1 May.
	I agree. It is an opportunity to get rid of the lies and broken promises: he should dismiss the Secretary of State for Transport, Local Government and the Regions right now.

Tony Blair: It does not surprise me that, yet again, what the right hon. Gentleman wants to do is to raise any issue other than those that matter to people. As I said, both sides accept that any misunderstanding was in good faith. I suggest that we get on and debate the real issues concerning the people of this countrytransport, health, schools, crime and the economy. On all those issues, of course, he has nothing whatever to say.

David Taylor: One more missed deadline, and still the Wembley project stumbles on. After this extra time, will there be a penalty shoot-out between Birmingham, Coventry and London? What does my right hon. Friend the Prime Minister have to say about the continuing debacle to the 85 per cent. of English football fans who live outside London? Does not this show that our party is still too susceptible to the metropolitan elite? Being told, All's well apart from the finance, is like asking, Apart from that, Mrs. Lincoln, how was the opera?

Tony Blair: First, let me thank my hon. Friend for that question. Secondly, there are those who make a perfectly good case for siting the national stadium in Birmingham, in Coventry or in other parts of the UK

Dennis Skinner: Bolsover.

Tony Blair: Or, indeed, in Bolsover. But in the end, these are decisions for the Football Association. The only way that the Government can take this decision ourselves is if we end up financing the whole project. We do not intend to do that. It is therefore a decision for the FA. It has agreed the funding in principle, and it should be allowed to get on with that. The point that my hon. Friend makes about the siting of the stadium may be perfectly reasonable, but it is not a decision for the Government. It is for the FA, and it should be left with the FA.

Charles Kennedy: On 27 February, the Prime Minister replied to me here that he retained full confidence in the Secretary of State for Transport, Local Government and the Regions because of his statement to the House on the previous afternoon. We now know that a vital aspect of that statement is materially inaccurate. Will he now explain to me, under his terms, how he still retains full confidence?

Tony Blair: I gave the answer a moment ago. When the Opposition were all crowing about the agreed statement that had been made between Mr. Sixsmith and the Department, I pointed out that the statement makes it perfectly clear that any misunderstanding was in good faith and, therefore, the allegation that somehow the Secretary of State had misled Members of the House was wrong.

Charles Kennedy: The reason for the statement from the Transport Secretary to which the Prime Minister referred was to correct the misleading impression that the Transport Secretary had given in an earlier television interview. How many goes does the Transport Secretary get? The Prime Minister is very fond of, Three strikes and you're out. Should the Transport Secretary not be out?

Tony Blair: No, Mr. Speaker, for the reasons that I have already given.

Tony Cunningham: I recently met members of my local mountain rescue teams. This year is the International Year[Interruption.] Obviously, there are supporters of my mountain rescue teams on the Opposition Benches. This year, the teams are busy promoting the international year of the mountain. Bearing in mind that many areas in mountain regions suffered badly as a result of foot and mouth, will my right hon. Friend join me in paying tribute to the skill and courage not only of the mountain rescue teams in my constituencythe Keswick and Cockermouth mountain rescue teamsbut mountain rescue teams throughout Britain, who I am sure the whole House will agree do an absolutely fantastic job?

Tony Blair: They do, indeed. I would like to congratulate my hon. Friend and his constituents on all the work that is done in Cumbria on mountaineering. I had an opportunity to see that myself last July when I visited the national mountaineering exhibition at Rheged. I remember it very well, and I was immensely impressed by the work that the teams do. I am sure that they will make a very valuable contribution to the United Nations international year of the mountain.

Christopher Chope: If the misunderstanding referred to earlier was in good faith, will the Prime Minister authorise the expenditure of public money to enable the Secretary of State for Transport to sue for defamation against The Daily Telegraph, which this morning described him as
	a liar, unfit for office in any government department?

Tony Blair: For the precise reasons that I gave, those allegations are false. I hope that my right hon. Friend the Secretary of State goes on to deal with the issues that really concern the people of this country. I note that, when the Leader of the Opposition had the chance to ask me about transport, he did not ask one single thing about the performance of transport, but merely went on with this issue, with which I have already dealt.

Brian H Donohoe: In my constituency, a group of women have formed Mothers against Drugs, which is an admirable organisation that fights all forms of drugs, drug taking and drug pushing. However, a young mother came to see me with a despicable product known as freekee drops, which her five-year-old had purchased from an ice cream van and with which the child had then mimicked the actions involved in taking drugs. The drops come in a packet shaped like a syringe.
	Every Member in the House has a responsibility to drive the product from shops in the United Kingdom. Moreover, given the fact that the drops are produced in Spain and that the Spanish hold the presidency of the European Union, will my right hon. Friend hold discussions with his counterpart in Spain to get him to cease the production of this product? If my right hon. Friend cannot do that, will he at the very least embarrass the importers into not stocking the product on the shelves in their shops?

Tony Blair: I understand that this issue has been raised with the trading standards agency in Glasgow, where the issue first came to people's notice, and with the Food Standards Agency. I shall certainly look into the issue and get back to my hon. Friend. I understand the problem to which he draws attention. In particular, we must make sure that no young person is tempted into drugs through this route. That would obviously be wholly wrong and wholly inconsistent with everything else that we are trying to do.

Bob Russell: The award of the Queen's Jubilee medal to members of Her Majesty's armed forces is welcome. However, is the Prime Minister aware that the Retired Officers Corps seems to have been overlooked? Given that many of those men and women have served upwards of 30 years and that they still serve Queen and countryoften wearing uniform in military baseswill he use his influence to ensure that members of the Retired Officers Corps receive the Queen's Jubilee medal?

Tony Blair: I understand entirely the point that the hon. Gentleman makes. He will know that members of the armed forces who retire are no longer serving members and become civil servants. That is the technical reason for the decision. I know that not many people are in those retired officer grades and it is worth looking into. However, the problem is whether there would be a read-across into other areas and instead of taking account of one very exceptional case, we end up having to take account of many other exceptional cases too. If I may, I will look into that and get back to the hon. Gentleman.

Tom Harris: I welcome the Government's commitment to making parents accept responsibility for their children's behaviour. However, can the Prime Minister assure the House that any proposals to penalise parents will not disproportionately affect the poorest households while allowing better-off parents to escape relatively scot free?

Tony Blair: I entirely agree that any proposal must be neutral in terms of the family's income. It is a question not of whether the family is middle class, poor or wealthy but of whether the parents have failed to exercise proper responsibility in respect of antisocial behaviour and truancy. I agree that we must ensure that the measures we take bear down on any families, irrespective of their level of income, who are allowing the situation to continue. My hon. Friend will know that there is much support, right across the country, for ensuring that we bear down in every way that we can on the menace of antisocial behaviour in our communities which causes so much needless distress.

Iain Duncan Smith: Does the Prime Minister think it right that NHS patients waiting for tests for illnesses such as cancer or heart disease should be excluded from the official waiting list figures as they are right now?

Tony Blair: I think the NHS waiting list figures should be the same under this Government as they were under the last Government and, as far as I am aware, they are exactly the same. We are applying the same tests in exactly the same way as the previous Government, which is what should happen.

Iain Duncan Smith: Well, the National Audit Office made it quite clear that they are not the same, so let us get back to the facts. Some 250,000 people are waiting for angiograms, scans, endoscopies and body scans. The King's Fund says that, if anything, that is an underestimate. We know that hospitals up and down the country already collect those data, so why does not the Prime Minister simply answer this question: why does he not instruct his Health Secretary to include those people on the waiting lists as they should be?

Tony Blair: Because the waiting list figures are done in precisely the same way as they always have been done. Of course I accept that people are waiting for treatment, but I point out to the right hon. Gentleman that there are now something like 25 per cent. more heart operations every year; there are 40 per cent. more cardiologists, and 20 per cent. more cancer consultants; and more than 90 per cent. of people with suspected cancer who are urgently referred by their GP see a consultant within two weeks, as opposed to just over 60 per cent. when we came to power. In addition, as regards the in-patient waiting list, virtually every single indicator is now in the right direction.
	I agree entirely that much more needs to be done, and as we are on the subject of policy at long last, let us ask the right hon. Gentleman what he would do. Our response to the problem is to invest in the national health service. We want to see more money invested in the health servicemore consultants, more doctors, more nurses and more equipment. Will the right hon. Gentleman please tell us what he wants to see?

Dennis Skinner: On the subject of money, has my right hon. Friend had a word with the Chancellor of the Exchequer in the past few days to ensure, as he said a little earlier, that everyone carries the same burden? Will the Chancellor introduce rules to change the Tories' 1993 Act that exempted certain people from having to pay inheritance tax? Will he bring the royal family into the net, in jubilee year?

Tony Blair: Just for a moment there, I thought that that was going to be a helpful question. I am sure that the Chancellor has heard what my hon. Friend said, but I do not think that he will have anything to comment at this stage.

Simon Burns: On the question of money again, does the Prime Minister care to reflect on a parliamentary written answer that he gave me on 10 April? Can he explain to the House why last year the Department of Health spent 93,000 on entertainment when the combined budget of No. 10 and Chequers was 21,000 less?

Tony Blair: If anything really indicates the state of the Tory party, it is that question. I am sorry, I do not have a detailed record of the entertainment budget either of the Department of Health or of Downing street or Chequers, but I tell the House what I do haveI have a plan to get money into the NHS to improve the service for people. The fact that the hon. Gentleman used to ask me about how bad the health service was in his area but is now unable to do so is an indication of the progress being made.

Jim Knight: In the last week, I have seen for myself in my constituency the success of drug treatment and testing orders, referral orders and the youth offending team, but in places such as Swanage and Portland, antisocial behaviour continues, along with complaints about the cost and bureaucracy of implementing antisocial behaviour orders. Is the Prime Minister confident that local authorities and the police have the tools necessary to deal with this scourge in our community?

Tony Blair: Drug treatment and testing orders are a very important weapon in the hands of the courts which give people a very clear choice: if they repeatedly commit offences and are on drugs, they can either go to prison or take proper drug treatment. I have found from talking to magistrates around the country that those orders have been very successful where they have been applied; however, we need to start to extend the concept so that we make sure that where people who are drug addicts are charged with offences and have a criminal record, they also, if possible, receive drug treatment. Otherwise, they will be back out on the streets committing the same types of offences.
	Antisocial behaviour orders have been successful where they have been applied, but we need to ensure that there are more of them. The Home Secretary is in the process of making sure that we slim down the bureaucracy associated with them, and it is important that they are seen as one of a range of measures to deal with the menace of antisocial behaviour. I am only sorry that neither the Conservatives nor the Liberal Democrats are supporting us on these measures.

Mark Hoban: Why will the Prime Minister not commit to deliver to the people of my constituency the same standards of health care that people in other European countries routinely experience?

Tony Blair: It is at about this time that one needs a planted question, I always feel.
	That is exactly what we are working on: we are trying to get money into the NHS, which is why we now have more doctors, nurses and consultants, why waiting lists are falling and why new hospitals are being builtthey are being built now. Indeed, in the hon. Gentleman's constituency, the NHS has received in the region of 98 million extra. With great respect to him, I think that his was an excellent question. He is right; that is precisely what we have to do, and I only wait for the moment when he starts to cross the Floor.

Eddie McGrady: I thank the Prime Minister and the Chancellor of the Exchequer for their visit to Belfast last Thursday. I very much welcome the investment and reform initiative that further consolidates the new institutions in Northern Ireland. Will the Prime Minister join me in welcoming the formal agreement between the Police Service for Northern Ireland and the Garda Siochana in the Republic of Ireland, which will facilitate the pursuit of terrorists and organised criminals? Will he, after 17 Maythe date of the election in the Republichave further urgent talks with the new Government of the Republic with a view to implementing fully outstanding matters from the Good Friday agreement: the north-south parliamentary forum, the north-south consultancy forum and the Bill of Rights for Northern Ireland? Will he undertake to pursue those vigorously?

Tony Blair: We will of course pursue all aspects of the Good Friday agreement. The work that the Northern Ireland Policing Board has already done is remarkable. Although there is great concern in Northern Ireland at presentI am sure there isfor understandable and obvious reasons, there is a clear need to demonstrate clearly on behalf of all parties associated with paramilitary organisations that they have indeed given up violence for good, properly and totally. The agreement reached and announced last week by myself and the Chancellor, along with the First Minister and Deputy First Minister, indicates the degree of progress that can be made when the political process is continuing and people have a chance to lead their lives in some sort of normality. I still believe, whatever the problems, that we have to carry on making progress, and I can certainly provide an assurance that we will do everything that we can to implement the remaining stages of the Good Friday agreement.

Points of Order

Eric Forth: On a point of order, Mr. Speaker. Yesterday, I raised in the House the matter of the Secretary of State for Transport, Local Government and the Regions[Interruption.]

Mr. Speaker: Order. I am listening to a point of order.

Eric Forth: I raised the matter of the Secretary of State for Transport, Local Government and the Regions, who has just scuttled out of the Chamber. He was in the Tea Room earliera sure sign that he must be in troubleand he has just sat through Prime Minister's questions in the Chamber. However, the House has not been able to hold him to account for what in the press today has been a humiliation not just for him, but potentially for the House.
	Mr. Speaker, how long are you or we going to allow the matter to go unresolved while everybody in the country knows that something has gone badly wrong in the relationship between Ministers and the House of Commons? Erskine May is clear, as is the ministerial code. Can you advise me on what we can do to bring to account a Secretary of State whom everybody in the land believes is being dishonest with the House of Commons?

Mr. Speaker: If the right hon. Gentleman feels that there has been a contempt, he must write to me. If he wants further advice, I remind him that on some occasions when I need advice, I go to him; he knows his way round the rules of the House and well knows how to bring a Minister to account. I urge him to look at his own experience.

Michael Fabricant: On a point of order, Mr. Speaker. I want to bring another Minister to account on an issue that is rather less serious, but nevertheless serious enough. Yesterday, I asked the Under-Secretary of State for Health, the hon. Member for Salford (Ms Blears), who is in the ChamberI told her that I was going to raise this point of ordera question about community or cottage hospitals in Lichfield. Replying to my supplementary question, she may have inadvertently misled the House on two points. First, she said that there would be
	52 in-patient beds, rehabilitation facilities, out-patient, diagnostics and X-ray equipment, a pharmacy, a minor injuries unit, a renal satellite dialysis unit and, I hope, a maternity unitall under Labour.
	However, we have those already. In fact, the plans for the new hospital simply provide for them, but not other existing services, so there will be a reduction. Far more seriously, however, the Under-Secretary went on to say:
	I am pleased that on his website he said that the Budget was good for the NHS.[Official Report, 7 May 2002; Vol. 385, c. 4.]
	The Under-Secretary left it like that, but are her remarks honourable, Mr. Speaker, when they mislead the House? In fact, my website says:
	The Chancellor of the Exchequer is gambling that the Government will finally be able to reverse the downward trend in the NHS services . . . It's a good budget for the NHSif only it works. But even by 2007, the Government will still be paying less than Germany or other countries pay for their health services which operate more efficiently.
	The point is, Mr. Speaker, that the hon. Lady quoted selectively and misled the House. Perhaps everyone should look at www.michael.fabricant.mp.co.uk to learn the truth of the matter.

Mr. Speaker: That was not a point of order.

Patrick McLoughlin: On a point of order, Mr. Speaker. On 26 February at column 574 of Hansard, I asked the Secretary of State for Transport, Local Government and the Regions:
	Will the Secretary of State say whether Mr. Martin Sixsmith was a civil servant in his Department on 22 February?
	He answered:
	As I said earlier, Martin Sixsmith offered his resignation, which was accepted, on 15 February.[Official Report, 26 February 2002; Vol. 380, c. 574.]
	How can the Secretary of State stand by the statement that he made to the House of Commons?

Andrew MacKay: rose

Mr. Speaker: Order. Let me answer. I am not responsible for the Minister's replies; therefore I cannot be drawn into the argument through points of order.

Andrew MacKay: Further to that point of order, Mr. Speaker. You, like all of us, are responsible for not bringing the House into disrepute. Outside in the country, the fact that a Secretary of State has misled the House in a major statement and has not been called to account at the Dispatch Box has brought the House into disrepute today. Many of us would like to know what is going to happen.

Mr. Speaker: I cannot add to my previous statement on the matter.

Patrick Cormack: Further to that point of order, Mr. Speaker. Is not there an honourable custom in the House that if a right hon. or hon. Member inadvertently misleads the House, they seek to make a personal statement? If the Secretary of State should ask you for permission to make a personal statement, would you grant it?

Mr. Speaker: I would look at the matter.

Chris Grayling: On a point of order, Mr. Speaker. On 21 March, in a written question, I asked the Home Secretary about the abolition of the special vouchers scheme. When last weeksix weeks laterI had not received a reply, I tabled a further written question asking when I might receive a reply. Yesterday I received a response from the Minister which stated: I will reply as soon as possible. It is now seven weeks since I tabled my original question. Can you give some guidance to me and to Ministers about acceptable time frames for responding to hon. Members' inquiries?

Mr. Speaker: I will look into the hon. Gentleman's complaint.

Performance of Private Hospitals

George Osborne: I beg to move,
	That leave be given to bring in a Bill to require private hospitals to publish independently audited information on clinical performance and on complaints from patients on the same basis as that required of NHS hospitals.
	A couple of weeks ago, I was at a children's tea party with my son when I started talking to Peter Touche, who was there with his twin sons, Charles and Alexander. The Bill is inspired by the tragic case of their mother, Laura Touche, who died three years ago of a brain haemorrhage after giving birth to the twins at the private Portland hospital in London.
	In January this year, a jury inquest found that Laura had died of
	natural causes contributed to by neglect.
	The natural causes included high blood pressure, which led to the brain haemorrhage; the neglect referred to the fact that no basic medical checks were carried out by staff at the Portland hospital for two and a half hours after her caesarean operation. It was only when Laura herself alerted medical staff to the fact that she was feeling very unwell that anyone realised that something was wrong. She was rushed to a specialist NHS neurology hospital, but never recovered.
	I know from my own son's recent birth at St. Mary's, Paddington, after caesarean section, that in the NHS a mother's blood pressure is checked regularly. It is checked every 15 minutes for the first hour after birth, every 30 minutes for the second hour, then hourly for the next three hours. In the country's leading private hospital, Laura's blood pressure was not checked at all. If that most basic of medical procedures had taken place, she may well have been alive today, and her children, Charles and Alexander, would have their mother.
	But for the courage and determination of Laura's husband, Peter, the truth would never have been known. It has taken a three-year legal battle in the High Court and the Court of Appeal for the full story of Laura's neglect at the Portland hospital to emerge. It is sometimes said that individual cases make bad law, but Laura's death and her husband's struggle to uncover the truth reveal a more endemic culture of secrecy in many private hospitals, and it is that culture which my Bill seeks to attack.
	Of course, cases of medical accidents and neglect sadly happen in all kinds of hospitalsNHS and private. One has only to look at the NHS's annual litigation bill to know that. It is often difficult for patients and their relations to get to the truth, regardless of where they are treated. A constituent of mine is still trying to find out what happened to the retained organs of her son, who died 30 years ago in an NHS hospital.
	I hope that in the NHS at least, public scrutiny is at last prising open the closed, clam-like world of the medical profession, where few admit to a mistake and no one rats on a colleague. The inquiries at the Bristol royal infirmary in Alder Hey have certainly helped; so too has the requirement for NHS trusts to publish data on how they perform in relation to, for instance, waiting times, trolley waits, cancelled operations, hospital cleanliness, post- operative deaths and emergency readmissions.
	As a member of the Public Accounts Committee, I have seen how the performance dataespecially on such things as waiting listscan be distorted and fiddled, often under intense political pressure. I hope that the new Commission for Healthcare Audit and Inspection will be sufficiently robust and independent to ensure that that no longer happens. Nevertheless, I am happy to commend the Government on the pressure that they have put on NHS trusts to be open about their performance. It must be good for patients and for taxpayers that NHS trusts find it more and more difficult to sweep their problems under the carpet.
	With the Bill I want to extend that pressure to the private medical sector, where there are not the same incentives to be open and transparent. The website of the pressure group Action for the Proper Regulation of Private Hospitals, to whose work I pay tribute, is full of examples. The problem is more general, however. In evidence to the Select Committee on Health three years ago, the Independent Healthcare Association said:
	there is frequently an undue emphasis on hotel standards such as decor and not sufficient emphasis or expertise into inspecting standards of treatment and care.
	The Minister might say, if there were an opportunity to respond today, that a much stricter regulatory regime for private medical care has been introduced in the last month. That is undoubtedly true, and welcome. As of the beginning of April, all private hospitals are subject to new standards and to inspection by the National Care Standards Commission. They are now required, for example, to ensure that the risks of proposed treatment are fully explained to patients. They also have to have a proper complaints procedure, which would have helped in the Touche case.
	However, there is still no requirement in the regulations for any private hospital to publish any data on its clinical performance. Unless the hospital volunteers the information, it is impossible to know how many deaths occur within 30 days of surgery or how many emergency readmissions take place, yet information of that kind is now freely available in the NHS. Although private hospitals now need to have a proper complaints procedure, there seems to be no requirement for them to publish complaints in the same detail. Other prospective patients therefore cannot judge the hospital's record for themselves.
	My Bill deals with all those deficiencies in a straightforward way. It simply requires private hospitals to publish the same independently audited data on clinical performance that NHS hospitals now have to publish. It also requires private hospitals to publish, in the same detail, complaints from patients. I note in passing what officials have probably already told the Ministerthat these requirements could be achieved through regulation under existing legislationbut sadly the option of a ten-minute rule regulation is not available to Back Benchers, so I am forced to propose primary legislation.
	Most private hospitals have nothing to fear from being open and transparent. The staff who work in them do a great job, and many would actually welcome public recognition of the high standards of care that they offer. The Bill will, however, make life much more difficult for private hospitals with something to hide.
	Some may ask why this is any business of Government. Does not private medicine mean exactly thata private matter in which the state should not become involved? But the state is already involved. More and more people are being forced to turn to private hospitals for their treatment. Last year, more than 1 million patients had surgery in the United Kingdom's 230 private acute hospitals, and the number continues to rise.
	The state will become even more involved in the private medical sector, if the Secretary of State for Health is to be believed. Last week he announced that he was giving primary care trusts full discretion to commission care from
	wherever it is best provided . . . from the public, private or voluntary sectors.
	He said:
	the provider of care is less important than the quality of care provided.
	I agree, but how can a primary care trust assess the best quality of care available, regardless of provider, if not all providers publish the same performance data?
	If the Health Secretary means what he says about commissioning care from where it is best providedI hope he doesthat must also mean NHS patients routinely receiving treatment in private hospitals. Surely those patients have a right to know how those hospitals perform, just as they now know how NHS hospitals perform. Surely patients and primary care trusts have a right to be able to compare for themselves on the same terms the quality of care that is provided in two different hospitals. Surely the taxpayers have a right to see that their money is properly spent.
	My Bill gives patients and taxpayers those rights and I commend it to the House.
	Question put and agreed to.
	Bill ordered to be brought in by Mr. George Osborne, Mr. Parmjit Dhanda, Fiona Mactaggart, Chris Grayling, Dr. Andrew Murrison, Mr. Boris Johnson, Mr. Mark Field, Andrew Selous, Mr. Hugo Swire, Mr. Richard Bacon, Mr. Gregory Barker and Mr. Bill Wiggin.

Performance of Private Hospitals

Mr. George Osborne accordingly presented a Bill to require private hospitals to publish independently audited information on clinical performance and on complaints from patients on the same basis as that required of NHS hospitals: And the same was read the First time; and ordered to be read a Second time on Friday 21 June, and to be printed [Bill 135].

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Value Added Tax

That the Value Added Tax (Buildings and Land) Order 2002 (S.I., 2002, No. 1102), dated 17th April 2002, a copy of which was laid before this House on 17th April, be approved.[Mr. Boateng.]
	Question agreed to.

Orders of the Day
	  
	Finance Bill

(Clauses 4, 19, 23, 26 to 29, 87 to 92, 131 and 134 and Schedules Nos. 1, 5 and 38)
	Considered in Committee.

[Sir Alan Haselhurst in the Chair.]
	  
	Clause 4
	  
	Reduced rates of duty on beer from small breweries

Question proposed, That the clause stand part of the Bill.

Edward Davey: I should like to make a brief contribution on the clause before we consider the detailed amendments, as I think that we need to debate the principle of the Government's proposal to introduce progressive beer duty. We will deal with some of the problems through Conservative amendments that will have Liberal Democrat support. In introducing a new tax relief, we should debate the underlying principle before we deal with the detail that is the subject of the clause.
	The Financial Secretary will be aware that the issue of progressive beer duty has had a long gestation before coming to the House. There has been a long campaign, and the introduction of such a duty has had many supporters in the House and outside, whether among brewers, beer drinkers or members of the Campaign for Real Ale. Hon. Members who have spoken to CAMRA members in their constituencies will know of the passion that is felt by many people about the new relief. It is not surprising, therefore, that the Government have been considering the issue. My hon. Friend the Member for Cheltenham (Mr. Jones), who is very active in the all-party group on beer, has been a champion for such a move in my party.
	The question, however, is whether the proposed move is right. The key argument used in its favour has been that we need a level playing field for the brewers who will benefit from the measure. The idea is that there is currently no level playing field between the microbreweries and small brewersthe traditional brewersand the very large breweries. The rationale for the lack of a level playing field is that the larger breweries can obtain many economies of scale. They can use fairly aggressive discounting methods. Sometimes, the question is asked whether those are against competition. Therefore, people have argued that reform is needed in the brewing industry to create a level playing field. Another important argument relates to competition: many proponents of progressive beer duty have argued that it will achieve greater proliferation of real ales and greater choice.
	The previous Conservative Government and, indeed, this Government have considered reforms of various aspects of the beer industry to try to create a level playing field and to increase choice. We have seen the beer orders and Office of Fair Trading inquiries. Different measures and ideas have been put forward to try to create extra competition. The Government's analysis for reform is based, I hope, on that notion. Many past reforms have not worked. Therefore, in deciding whether it wants to go down this road, the Committee must ask a few pertinent questions and put the policy to a few stringent tests.
	The first obvious question is whether the duty reform will maintain and indeed increase the choice of real ales and the quality of beer available to consumers. Will the rebate enable that? What financial analysis has Her Majesty's Treasury done to show that the relief is needed to meet those objectives? Will the relief improve the position of the brewing industry and improve choice for consumers?
	I assume that the Treasury has undertaken such research. Clearly, before one spends taxpayers' money, one will want to be certain that the policy is going to produce the benefits that it is alleged it will produce. I hope that the Minister can reassure the Committee that the research has been done. Moreover, I hope that he will promise to publish that research, so that it is in the public domain and so that, before we get to Report, we will all have a chance to examine what the boffins in the Treasury have been working on to justify the policy.
	I hope that the Minister will go further and reassure the Committee that the relief will be examined to check that it is meeting its objectives. We all wish it well. We all hope that it will work, but the Government need to ensure that when reliefs are created they are meeting their objective.
	The evidence that we have seen from sources in the industry, from consumers and from CAMRA is fairly compelling. We have looked at that research and been fairly impressed by it, but the Government have a different job if they are to represent the interests of the taxpayer. They must ensure that the research from the industry and from CAMRA is valid. They must do independent research to convince hon. Members on both sides of the Committee that the relief would be a good use of taxpayers' money. I hope that the Minister can assure us that the research has been done, and that this was not a last minute, tabloid-pleasing, rabbit out of the hat policy decided at the last minute, with the World cup taking place this summer.

Mark Field: The hon. Gentleman suggests that the argument for the proposal is compelling. What proportion of British beer would be covered by clause 4?

Edward Davey: I am grateful for that intervention. I believe from research that I have seen that less than 2 per cent. of beer brewed in the United Kingdom will benefit, but that will not necessarily go against the thrust of what the Government are doing, if their research shows that the proposal will improve competition and choice. It will have a big effect on more than 350 breweries, so it may be welcome, but we need to see the evidence to be reassured.
	Let us be clear. If Parliament passes the clause and the schedule that is linked to it, it will agree to expenditure of 15 million, which is an awful lot of money. It is also being asked to agree to put on the statute book nine new pages of tax law to back up the 15 million tax concession. We should also bear it in mind that private sector companies and Customs and Excise officials will have to spend hours ensuring that the money works properly and is not abused. In due course, as the wily minds of the private sector find ways around the nine pages before us, we will doubtless be asked to pass anti-avoidance legislation.
	Although I am trying to provoke a debate on the principle behind clause 4, I do so in a spirit of acceptance of the policy. I hope that it will bring about the claimed advantages, and that the Minister can reassure us that it is well researched. Who in this House would oppose cheaper beer and greater choice in the pub? It is a popular notion that we would want to support in general terms, but we need reassurance on the detail.
	I have one final point for the Minister. According to some sources, the Chancellor's presentation of the policy on Budget day was rather misleading. He implied that it would result in a 14p reduction in the price of a pint of beer, but those hon. Members who have examined the policy in detail will know that the cut in duty is unlikely to be passed on to the consumer. Many brewers have told me that they are concerned about the way in which the policy is portrayed. They believe that most breweries will try to invest the money, given that theyparticularly small independent microbreweriesoperate on very tight margins. That would be a laudable use of the money, and with that in mind I hope that the Minister will present the policy in a slightly different way to that deployed by the Chancellor on 17 April.
	If the policy will not in fact result in a 14p reduction in the price of a pint of beer, those beer drinkers who, hopefully, will be watching us massacre Sweden in the World cup will want to know why they cannot buy beer at that price. If the answer is that breweries will invest the money in providing a greater choice of beers, in premises through which to sell beer, and in independent outlets, that might well be a good thing, but we want to know whether that was the Government's intention. We do not want to hear the spin that we heard on Budget day; we want to know the reality behind the proposal. I hope that the Minister can give serious answers to those serious questions.

Christopher Chope: I am delighted to hear that the hon. Member for Kingston and Surbiton (Mr. Davey) supports our amendments, and we, too, support clause 4. He was in fact being rather kind to the Government in arguing that the Chancellor has said one thing but that the reality is rather different. I wonder whether he is aware of today's statement by the Independent Family Brewers of Britain, which consists of 33 family-owned and family-run brewers and pub retailers:
	The way the Chancellor announced the reductions was a complete con. We estimate that approximately 0.5 per cent. of pubs will be able to take advantage of the change in beer dutyany England fan looking for cheaper beer at the time of the World Cup will have a very long (and thirsty!) search. The public has been misled into believing that village pubs will offer cheaper beer and that is only the case in a tiny, tiny minority.
	In identifying the fact that, as so often in the past, the Chancellor's Budget is all clever words designed for a wider audience, the hon. Gentleman has made a good point. As we always say, we must look at the small print. The Chancellor said in his Budget statement:
	I have decided that the duty paid on their own beer will be halved. This is a cut equal to 14p off each pint, to be implemented for village pubs and small breweries by this summerin time for the World cup.[Official Report, 17 April 2002; Vol. 382, c. 584.]
	However, that is far from the truth.

Howard Flight: As usual.

Christopher Chope: As my hon. Friend says, that is usual. I hope that we will hear an explanation of why the Chancellor spoke at such length to give the impression to people listening to his Budget that they would be able to get cheap beer after 1 June, when the reality is very different.
	I shall not say any more about clause 4, because it is important to get on to the amendments. If we accept the principle, we need to ensure that we come up with a workable system. At the moment, it is not workable.

Paul Boateng: The Opposition were characteristically carping, cavilling and mealy-mouthed. After many years of campaigning for this change by many sectors of the industry and the pub-going publicbacked by some Liberal Democrat and Conservative Memberswhen the day finally arrives, we hear nothing but whining and attempts to undermine a real achievement for the industry. It will bring new hope to nine out of 10 UK breweries, which will make savings of up to 120,000 as a result of this measure. That includes all microbreweries and local breweries.
	What we should have heard from the Opposition was some acknowledgement that they supported the change. Successive Governments have sought to support the diversity of the British beer market, notably by use of regulations allowing independent brewers access to tied estates. As the number of tied estates has fallen and pub companies have come to the fore, it has become increasingly difficult to promote diversity and market access through regulation. When we are asked for the rationale behind the scheme, it is an attempt to meet that concern and recognise the particular difficulties that small breweries face when seeking to grow their business and compete for access in today's beer market.
	We estimate that the savings will help small breweries to remain profitable when selling beer to pub companies at discount rates and, for many, will allow them to invest in their own pubs, which will offer them a more secure and stable outlet for their products. Of course, the choice is theirs; it is not for the Government to dictate how small breweries should make use of the savings now available. Some may choose to cut their prices, but others will seek to re-invest the savings to enable them to compete against medium and large breweries. That is why we, too, found convincing the arguments put to us by the Small Independent Brewers Association.
	The scheme has been under active consideration by successive Governments since at least 1989, when it was recommended by the Monopolies and Mergers Commission. Indeed, we have been in close consultation with the brewing industry since announcing that we were considering the scheme in the 2001 Budget. That consultation demonstrated exactly what we have announced and the veracity of the rationale that lies behind the measure. The suggestion by the hon. Member for Kingston and Surbiton (Mr. Davey) that this was a Budget wheeze thought up a few days before to grab some headlines does not do him justice. He gives these matters greater consideration than that cheap jibe would suggest. I hope that he does not intend to continue in that vein for the rest of the consideration of this Finance Bill.

John Bercow: I hope that he does.

Paul Boateng: The shadow Chief Secretary says from a sedentary position, I hope that he does. I wonder how often the hon. Gentleman will turn up in Committee. He will not have to endure the hon. Member for Kingston and Surbiton

John Bercow: I will be there.

Paul Boateng: Good. We look forward very much to the continued attendance of the shadow Chief Secretary, as we want to put him to the test. He has not had any testing yet, and it is time that he had some.

Edward Davey: rose

John Bercow: rose

Paul Boateng: I see the shadow Chief Secretary is itching to respond, but he will have plenty of time to do so in the Committee's deliberations. He must restrain himself just a little longer, while I give way to the hon. Member for Kingston and Surbiton.

Edward Davey: I am grateful to the Financial Secretary for giving way, although I am sorry to stop him in his rather tedious tracks. So far, he has failed to say whether he will publish the analysis performed by the Treasury before the policy was decided. The right hon. Gentleman has said that there has been consultation. Have the results been published? If so, where are they available? If not, when will they be published?

Paul Boateng: I am not going to fall for that one. I would not want to be tedious and bore the Committee this afternoon in the way that the hon. Gentleman suggests. I am only too happy to write to him to outline the general nature of the consultation, but I do not intend to publish the details. The hon. Gentleman can do what he will with the letter that I shall write to him on the subject, but he needs to understand why the small breweries so welcome the measure.
	The measure will help to level the playing field. Small brewers will be able to compete more effectively with the big regional and national breweries. They will be able to use the savings that they make to invest in their own pubs, or to offer increased discounts when selling their beer.
	The proposed relief will provide support for small brewers throughout their growthfrom the first barrel that they produce until they reach the 2.5 million turnover of regional brewers. The relief is focused and will meet the needs of those who require it most. It will retain for the UK the rich diversity of its brewing industry, and protect consumer choice in an age when multi-million pound pub companies dominate the retail market.
	We want a beer industry in which 500 brewers have access to the market, and not just the largest 50. That is why the small brewing industry has welcomed the measure with such warmth. The proposal is right in principle, which is why it will be capable of withstanding the detailed scrutiny of the Committee.
	I commend the principle and its outcome to the Committee.
	Question put and agreed to.
	Clause 4 ordered to stand part of the Bill.

Schedule 1
	  
	Beer from small breweries: reduced rate of duty

Christopher Chope: I beg to move amendment No. 17, page 110, line 32, at end insert
	'(3) Beer produced in a small brewery for export shall not count towards the maximum production levels specified for small breweries elsewhere in this Part.'.

Alan Haselhurst: With this it will be convenient to discuss the following amendments: No. 4, page 112, line 2, leave out 30,000 and insert 200,000.
	No. 5, page 112, line 14, leave out 30,000 and insert 200,000.
	No. 7, page 112, line 17, leave out 30,000 and insert 200,000.
	No. 6, page 112, line 20, leave out from that to end and insert
	'beer produced under licence is not small brewery beer'.
	No. 8, page 112, line 26, leave out 30,000 and insert 200,000.
	No. 9, page 113, line 9, leave out 30,000 and insert 200,000.
	No. 10, page 113, line 13, leave out 30,000 and insert 200,000.
	No. 11, page 114, line 19, leave out 30,000 and insert 200,000.
	No. 12, page 115, line 10, leave out 30,000 and insert 200,000.
	No. 13, page 115, line 13, leave out from that to end and insert
	'beer produced under licence is not small brewery beer'.
	No. 14, page 115, line 22, leave out 30,000 and insert 200,000.
	No. 15, page 116, line 42, leave out 30,000 and insert 200,000.
	No. 16, page 116, line 46, leave out 30,000 and insert 200,000.

Christopher Chope: The amendments would introduce common sense into the eligibility rules entitling small breweries to a reduced rate of duty on their first 5,000 hectolitres of production. In this debate, we shall have to refer quite a lot to hectolitres. People following the debate may wish to know that a hectolitre is 100 litresalmost 22 gallons, or 176 pints. Unfortunately, the Bill refers to hectolitres.
	Amendment No. 17 would exclude from the calculation of annual production for the purpose of assessing eligibility production for export, which is already exempt from the penal rates of beer duty on domestic sales. However, the amendment is not as far reaching as amendment No. 4 and the consequential amendments Nos. 5, 7, 8, 9, 10, 11, 12, 14, 15 and 16. Those amendments would extend relief to all brewers producing up to 200,000 hectolitres per annum, instead of limiting it to those producing up to 30,000 hectolitres per annum. It is because amendment No. 4 goes to the core of the argument that I shall seek to divide the Committee on that amendment rather than amendment No. 17.
	Amendment No. 4 would make about another 25 small breweries eligible for relief at a cost to the Exchequer of about 3 million or 3.25 millionabout one tenth of 1 per cent. of total beer duty yield. The Financial Secretary referred to regional brewers as though only they were excluded from this scheme. He may be interested to know about the Ringwood brewery, close to my constituency. It is not a regional brewery but a popular local brewery and it produces between 40,000 and 50,000 hectolitres per annum. It is a family firm, founded in 1978; it originally had one employee and now employs 44 people. Within any definition, it is a small business and a small brewer. It was gravely misled, because it assumed that the benefit would apply to it, but it will not.
	The Chancellor told the House and the nation in the Budget that he would
	encourage one group of small businesses, the nation's small breweries.
	He went on to say:
	I have decided that the duty paid on their own beer will be halved.[Official Report, 17 April 2002; Vol. 382, c. 584.]
	The Ringwood brewery thought that it would be one of those small breweries, but the small print shows that it does not qualify.
	The situation is pretty serious, not just for the Ringwood brewery but for a number of other independent family breweries. The Independent Family Brewers of Britain says:
	We had asked the Government to follow the European model and allow tax relief for small brewers producing up to 200,000 hectolitres a year . . . The 30,000 hectolitre limit proposed in the Budget affects under 2 per cent. of the market and will leave many small brewers out in the cold.
	The letter continues:
	We are delighted that the Conservatives are asking the Chancellor to help brewers like ourselves and fully support their suggested amendments to raise the production threshold for tax relief to 200,000 hectolitres from the proposed 30,000 hectolitres and also to allow beer produced in small breweries for export not to count towards these maximum production levels.
	That is a good third-party endorsement for the common sense encapsulated in the amendments.

Edward Davey: I am grateful to the hon. Gentleman for giving way, especially after reading out that press release. Did it go on to say what it thought about the Conservatives' record in failing over 18 years to introduce a reduced rate?

Christopher Chope: No, it did not. I understand that my right hon. and noble Friend Lord Cope went to Europe and signed a document on this in 1993 or 1994. Unfortunately, he was not in a position to bring a measure before the House. However, it ill behoves the Government to suggest that they have been quick to remedy the situation.

Robert Key: Five years.

Christopher Chope: It has taken them five years, as my hon. Friend the Member for Salisbury (Mr. Key) says. What did they do when they first got into office? They added 2p duty to a pint of beera further anti-competitive measure introduced by this Government. Now, late in the day, after five years in office, they propose this measure. Although we welcome it, let us not delude ourselves into thinking that the Government were quick off the mark as soon as they got elected in 1997. I am sure that, had we been returned to office in 1997, we would have introduced such a measure much sooner.
	One of the key elements of the proposal is a cliff edge that will adversely affect breweries as soon as production exceeds the 30,000 hectolitre point. A brewery that crosses that threshold will immediately forfeit 120,000 in duty relief. I have been advised that to compensate for that, a brewery would have to double its production to about 60,000 hectolitres before it became worthwhile to stay in business at that level of production, instead of reverting to a production level of less than 30,000 hectolitres. That is why the measure is so damaging to breweries in the production range of 30,000 to 60,000 hectolitres. It will act as a perverse incentive on those breweries to reduce their production, which is quite the reverse of what the Chancellor seemed to intend. Moreover, it will provide no incentive whatever for breweries that are below the 30,000 hectolitre limit to push up their production and expand to beyond that level.

Robert Key: My hon. Friend hits the nail on the head. What were once microbreweries have grown, and the cliff-edge approach is wholly wrong. I thank him, on behalf of the management, work force and customers of the Hopback brewery in my constituency, for tabling the amendment. The Ringwood brewery is pretty good, but of course Hopback is much better, and is acknowledged to be so all over the country.
	The amendment is wholly sensible, and I hope that the Minister will listen to our argument. The tapered approach is much more likely to achieve what the Chancellor wantsa level playing field for smaller brewers.

Christopher Chope: I am grateful to my hon. Friend and pay tribute to the work that he has done with the Hopback brewery in promoting the amendment and in trying to get the Government to listen. That brewery is expanding, and wants to do so in order to become significant in the marketplace.
	Total production by breweries that produce less than 200,000 hectolitres a year is only about 5 per cent. of overall total beer production. Only the six very large breweries, which are largely international, and six or seven other large breweries, which are quoted on the stock exchange, have production levels of substantially above 200,000 hectolitres a year. If the Government are really interested in helping small breweries, they should extend the definition of a small brewery to cover all those with production levels below 200,000 hectolitres. European legislation refers to that 200,000 limit. As we have by far the highest beer duty of any country in Europe, why are the Government so churlish about introducing the European maximum level for allowing such concessions to be made? That would not involve much cost to the Exchequer.
	I hope that the Government will accept this common-sense amendment, which would allow the Bill to work to the advantage of small and growing breweries and redound to the benefit of those breweries and their loyal customers.
	This is not a matter only of breweries in general or of beer in general; it is very significant for those of us who enjoy real ale, because about half of the total production of real, or cask, ale comes from small independent brewers. They are the ones who have introduced choice; they are maintaining a key element of our British way of life. Some of their beer may be served warm and some of it may be served at cricket grounds where our former Prime Minister can sip it as he watches the game.
	The amendments, if accepted, will ensure that there is more growth in cask ale production than heretofore. They will be good for British brewing. I commend them to the Committee.

Edward Davey: My right hon. and hon. Friends and I support the amendments proposed by the Conservative Opposition. If it is right to support small and microbreweries, the Government must get the legislation right. They must get their analysis right, which is why, in our previous debate, I called for their analysis to be published. At least we would then have information that would help us to debate the issue.
	If the Financial Secretary to the Treasury writes to me with acceptable evidence, there will be no problems with the schedule on Report. However, like the hon. Member for Christchurch (Mr. Chope), we have some concerns about what the Government are doing. The 30,000 hectolitre limit seems wrong. Not only does it run counter to the European directive that allows an upper limit of 200,000 hectolitresit is surprising that the Government have not given the industry the support that it is allowed under that legislationbut it is a bizarre use of taxpayers' money. In the first year, the 30,000 hectolitre limit will cost the taxpayer 10 million, and in subsequent years, 15 million.
	Evidence from the brewing industry shows that raising the limit from 30,000 to 200,000 hectolitres would cost only a further 3.2 million. If the Government challenge that figure, perhaps Ministers will give us further information on those costs. There are only 27 breweries in that sector of the market, while 350 breweries would fall below the 30,000 hectolitre limit. The tax advantage would apply only to a small number of breweries, so the extra cost would be relatively small. There cannot, therefore, be a cost argument against increasing the limit as the cost is marginal.
	The brewing industry is concerned about the measure's impact on competition. The hon. Member for Christchurch touched on that, but did not go into detail. I do not pretend to be an expert on the brewing industry, but it seems to be divided into three groups: at one end, there are microbreweriessmall local breweries and pubs that brew their own tipple; at the other end are the huge brewing companies that have developed during the past decade or so; and in the middle, there are medium-sized independents. Some of them have a brewing capacity of more than the 200,000 hectolitre limit, so they would not benefit from the amendments. However, at least such breweries would accept the restrictions imposed by the EU legislation.
	The 27 breweries to which I referred include Brakspear, St. Austell brewery, in the constituency of my hon. Friend the Member for Truro and St. Austell (Matthew Taylor), Harveys brewery, in the constituency of my hon. Friend the Member for Lewes (Norman Baker) and Hook Norton brewery. Those breweries would benefit if the Government extended the limit. In order to ensure that an important segment of the brewing industry is not disadvantaged and that we do not create distortion in the market, the Government would be well advised to accept the amendments.
	On a political point, I would counsel the Government not to be too concerned by the contents of the press release that the hon. Member for Christchurch read out. Although the amendments were tabled by Conservative Front-Bench Members, I believe that they enjoy the support of hon. Members in all parts of the House; I hope that Labour Back Benchers will take part in the debate. If the Financial Secretary realises that, he will not be frightened out of accepting the amendments simply because they were tabled by Conservative Front-Bench Members.

Kelvin Hopkins: I am not familiar with the economics of running breweries, although I have toured two in my time, but it seems possible that economies of scale are much more critical for very small breweries than they are for the breweries that the hon. Gentleman is speaking about, and that the Government's proposals are aimed at helping very small breweries to survive and proliferatewe hope, to make beer even more varied than it is now.

Edward Davey: The hon. Gentleman makes a fair argument, but if he talks to those particular brewers he will find that they still have problems competing with the larger breweries, who have huge economies of scale and huge selling power, and can therefore operate at an extreme competitive advantage. Thus many of the breweries that we are arguing for tonight would benefit. Moreover, many of them, because they are traditional brewers, occupy very traditional premises, which are in themselves almost part of the cultural heritage. If they are to reap some of the modern benefits of economies of scale that the hon. Gentleman referred to, many of them would have to move premises, leave their traditional roots and, possibly, their local setting, which often gives its name to their brew. If the hon. Gentleman were to talk to brewers in that category, he would be reassured.
	Finally, I want to raise a point of principle. Obviously, any limit creates distortions against growth, because some brewers will naturally come up against that limit as they expand. However, we have a cross-Europe limit, imposed by the European Union, of 200,000 hectolitres, so it is odd that the Government have chosen a lower one.
	Mr. James Staughton from St. Austell Brewery Company Ltd. explained to me that his brewery was currently looking to expand. Its total production is just under 30,000 hectolitres, so it would benefit, but if it expands as it intends to, its production would go over the limit. The company is in the very difficult position of having to decide whether to halt its planned expansion in order to get the benefit of the reduced duty rate, or go ahead with the expansion and lose that new advantage. Thus the limit has already affected a commercial decision by that brewer.
	I am sure that many other brewers, either currently or in the future, will have to make that difficult decision. It is bad when the Government produce a tax relief that affects ordinary commercial decisions. There would be a logic to a 200,000 hectolitre limit, because that would fit EU legislation; there is no logic to the 30,000 hectolitre limit.

Chris Bryant: Does the hon. Gentleman accept that subsection (10) of proposed new section 36C on page 112 would not create the cliff-top situation mentioned by the hon. Member for Christchurch (Mr. Chope) earlier? Actually, the individual brewery will receive the benefit up to 30,000 hectolitres in that year, and then will pay duty only on the amount in excess of the limit. Future decisions might be affected, but in the specific year the brewery will not suddenly face that collapse.

Edward Davey: The information that I have received from the brewers is that many will have their commercial decisions affected in the way that I describe, so I cannot necessarily agree with the hon. Gentleman. There is a taper in the new relief, but it applies below the threshold, not quite in the smooth way that he seemed to imply above the threshold.
	Moving away from the principle behind the amendments, may I seek clarification from the Minister on one or two specific points? Many brewers who are reading the Bill do not understand what the Government are trying to do. For example, the first condition, which is set out on page 114 in proposed new section 36E(4), refers to the eligible amount of beer produced in the previous year. Obviously, breweries can calculate that amount from their sales figures, but the second condition refers to the amount that is expected to be brewed in the future. Brewers will have to try to work out whether they are eligible for that relief, but they are not sure which production level will count. So they need guidance from the Minister, or from Customs and Excise officials, to work out whether they will be eligible. What baseline should they use to judge their eligibility?
	Other concerns have been raised with me. For example, some people have queried the fact that the Government have chosen to use the figure 365 in the calculation that appears on page 114 in proposed new section 36E(5). Obviously, that figure refers to the number of days in a year, but the Independent Family Brewers of Britain informs me that no brewer brews every day of the year. That association wonders why the Government have based their calculation on something unrelated to brewers' production schedules.
	The final point on which various brewers have asked me to seek clarification relates to proposed new section 36C(3), in which the Government try to define a relevant breweryfor example, whether it can consist of a group of breweries and how the brewery is formed. The concern is that the Government suggest in part of that section that the definition relates to the employees. If an employee is a member of a brewery or a group of breweries, he or she can attract the relief. However, the implication is that if that person decides to change jobs in that year and works for another brewery that is not a member of the group of breweries, the first employer will not be entitled to the relief.
	The hon. Member for Buckingham (Mr. Bercow) laughs, but that is the commercial reality. People want to know whether their employment decisions and the decisions that their employees take will change their eligibility for the relief. I hope that the Government will provide clarification on that matter.

Boris Johnson: I rise in wholehearted support of the amendment moved by my hon. Friend the Member for Christchurch (Mr. Chope). I speak on behalf of one of the 27 breweries not to be favoured by the Bill, unlike the other 320 that are to be favoured by it. Like my hon. Friend, my heart leapt when I heard the Chancellor speak of measures in the Budget to help small breweries, because I thought that he must mean Brakspear in my constituency.
	Hon. Members will be familiar with Brakspear's bitter. If they are not, they jolly well ought to be. I do not mean to cast aspersions on any of the other excellent beers that are brewed in my hon. Friends' constituencies, but they will agree that Brakspear's is the finest because it is brewed by the traditional double-dropping method and therefore contains a higher quotient of hops than most normal beers. Indeed, when I was at school, my school had a contract with Brakspear. We were supplied with Brakspear's beer every Sunday. I am a living testament to the benefits of that drink.

Andrew Mitchell: It was not Ashdown house, was it?

Boris Johnson: No, it was not Ashdown house.
	Imagine how surprising and saddening it is not just for me, but for a great many people in my constituency and elsewhere, to find that Brakspear is now, after more than 200 years, at serious risk of ceasing to brew. It is highly likely that Brakspear will no longer be able to brew the bitter for which it is famous. Inspector Morse used to drink Brakspear's bitter. It is a great shame that that traditional English beer should be coming to an end.
	Why is it coming to an end? Brakspear is facing adverse trading conditions in many different ways. I had a long conversation on Friday night with a chief executive who is extremely alarmed about the national insurance hikes, and so on. He is extremely upset by the Chancellor's decision to favour 320 microbrewers and not to favour the 27 other brewers about which the hon. Member for Kingston and Surbiton (Mr. Davey) spoke eloquently. Plainly, the 27 othersincluding Brakspearshould be included in the exemption outlined in the Budget. I see absolutely no reason why the threshold cannot be raised to 200,000 hectolitres, given that, as has been repeatedly pointed out, that falls in line with European Union recommendations anyway.
	Brakspear is a small brewery, it is a local brewery and it is under serious threat of ceasing production. It makes an absolute nonsense of the Government's claims to favour choice, diversity and old businesses to push through a measure that could expedite its closure. It should be helped, and I hope that the Financial Secretary will respond creatively and imaginatively to the sensible amendments that have been supported by both main Opposition parties, and do his level best to save Brakspear in Henley from ceasing to brew. That would be a great disadvantage not just to my constituency but to the brewing community and to the drinking public.

Paul Boateng: Tempting though it is, I shall not be drawn into discussing the merits of individual brews and breweries

John Bercow: Go on.

Paul Boateng: The shadow Chief Secretary will appreciate the problems of discussing the individual tax affairs of individual companies at the Dispatch Box. He would be the last person to encourage me to go down that route. Hon. Members who have breweries in their constituencies are perfectly right to raise their constituents' concerns, however, and I know that Customs and Excise is still in discussion with several of those breweries. We await with interest and eager anticipation the outcome of that discussion as to whether those breweries qualify, at least in part, for relief.
	I have heard the heartfelt pleas of the hon. Member for Henley (Mr. Johnson), who opined about the imminent demise of a brewery that served his alma mater. I would hate to go down in history as the Financial Secretary responsible for depriving the boys of Eton college of their favourite brew. Deprived and underprivileged as they are, to deprive them of their beer would really be the last straw. We have all heard, with varying degrees of sympathy, the pleas made by hon. Members about individual breweries, but they will understand why I cannot deal with those individual cases.

John Bercow: I am just a poor state school product from Finchley, so I would not know about the highfalutin matters being described by the Financial Secretary. The commercial pressures faced by brewers on the one hand, and the financial costs incurred by beer drinkers on the other, represent the context of our discussion. Will the Financial Secretary therefore demonstrate his grasp of the issue by telling us, for the current financial year, what proportion of the price of an average pint of beer is accounted for by tax and excise duty?

Paul Boateng: It would be most unwise, in considering this question, to suggest that small regional breweries are likely to go out of business as a result of anything that this Government have done. [Interruption.] I shall come to the hon. Gentleman's question in a minute. However, it is hard to accept that a brewery with an annual production of 70,000 hectolitres and a turnover of 8 million will be threatened if it does not receive relief worth just 1.5 per cent. of its total turnover. It is similarly hard to accept that such a brewery will be priced out of the market because brewers with a turnover of less than half that receive some relief. To suggest that, as a result of the measure, some brewers will be put at a competitive disadvantage is to over-egg the pudding a bit.

Kevin Brennan: My right hon. Friend has hit the nail on the head. Can he explain the logic behind the Opposition's argument? They suggest that the measure will not result in a fall in the price of the beer produced by small brewers and yet they claim that the fall in the price of the beer produced by small brewers will put slightly larger brewers out of business. How can the Opposition sustain both propositions at the same time?

Paul Boateng: I find it very difficult to fathom the logic in the arguments of Opposition Members. They are opposing for the sake of opposing, and that is their right. I suppose that, if we were in their position, we would do likewise. However, we are not likely to be in their position for a very, very long timepartly because of the success of the measures outlined in the Budget.
	What got me in the questions of the hon. Members for Buckingham (Mr. Bercow) and for Christchurch (Mr. Chope) was the suggestion that this Government were something other than the friend of the beer drinker and the brewer. I hope that the hon. Member for Buckingham knows what has happened to duty, because it is dangerous to ask a question the answer to which one does not already know. That is why his question is surprising. I feel constrained to point out to him that duty, as a proportion of the retail price of a pint of beer, was 32 per cent. in 1991. Today, it is 29 per cent. That is a fall of 3 per cent. Beer duty has been frozen for the last two Budgets, and that has saved British beer drinkers a very large amount of money.
	I challenge the hon. Member for Buckinghamperhaps he will be so good as to take note of the challengeto write to me to show whether, in any period of the Conservative Administration, he can point to a similar record of support for the industry.

John Bercow: I will do that.

Paul Boateng: Good. The hon. Gentleman is going to take me on. He will have plenty of time in Committee to share with us the outcome of his research.

Edward Davey: rose

Paul Boateng: I must make progress, because I want to come to the points that the hon. Member for Kingston and Surbiton (Mr. Davey) raised.
	The hon. Gentleman asked why the limit has been set at 30,000 hectolitres. It is an interesting question, because there are at least 115 reasons in an early-day motion that show why the limit should be set at 30,000 hectolitres. The early-day motion has been signed by Members on both sides of the House, including leading members of the Liberal Democrats.

John Bercow: Is there such a thing?

Paul Boateng: Yes, there is. We must be fair to the Liberal Democrat party. It has some distinguished members, and a number of them have signed the early-day motion. However, I do not see the signatureperhaps I have missed itof the hon. Member for Kingston and Surbiton. Still, all who signed the motion call for a limit of 30,000 hectolitres, and that is not surprising. They show a great deal of good sense by calling for that limit, because it is supported by the Society of Independent Brewers. Hon. Members know that that society rather than any other represents small local brewers. It is the voice of the small local brewer and the measure is designed to support them.
	The hon. Member for Kingston and Surbiton said that he does not know much about the beer industry but thinks that it is divided into three sectors. It is possible to do that. The 400 microbrewers and the local brewers are usually described as small brewers. If we link them with the 40 regional brewers and the handful of national brewers, that makes three sectors. It is, of course, also possible to divide the industry into four sectors if we disengage the microbrewers and the local brewers, as some people would prefer.
	We know, however, that the 40 regional brewers and the handful of national brewers have a different interest from the local brewers and microbrewers. We need to be open and up front about that. The measure is designed to benefit local brewers and microbrewers. Although there is undoubtedly some overlap at the marginsperfectly fair points can be made about thatit is generally accepted that the break between local brewers and regional brewers is at about 30,000 hectolitres.

John Bercow: I think I have got the point.

Paul Boateng: Good, because in that case the Conservatives will not divide the Committee.

John Bercow: We will divide the Committee.

Paul Boateng: So the Conservatives will divide the House even though they have got the point. That simply does not make sense.

Boris Johnson: I do not understand how the right hon. Gentleman can repeat that the measure is intended to benefit local brewers when it is clearly playing a part in expediting the demise of Brakspear's brewing in south Oxfordshire, something that it has done for 200 years. How can that be helping local brewers?

Paul Boateng: I understand and applaud the hon. Gentleman's perseverance on behalf of his local firm, but when he reflects on the measure and the figures, he will realise that the suggestion that it will put his local brewer out of business is a travesty of the truth.

Edward Davey: Will the right hon. Gentleman give way?

Paul Boateng: I want to finish the point. At 30,000 hectolitres, brewers have a turnover of more than 2.5 million. It is fair to say that a measure to benefit small businesses should focus on a break-off point of about 2.5 million. I do not think that that is unreasonable, as I hope the House will recognise in the fullness of time.

Edward Davey: The right hon. Gentleman told us that the Government have listened to the Society of Independent Brewers. I do not want him or his colleagues to doubt that we applaud the fact that, unlike the last Conservative Government, they have listened. In that spirit, therefore, and as part of their desire to be open to argument, will he agree that if the amendment is withdrawn and there is no Division, he will consult the brewing industry further to determine whether the welcome reduction in beer rates can be extended in the small way that is proposed, and allow us to debate the matter again on Report?

Paul Boateng: No, I will not. The hon. Gentleman did not table the amendment and he is in no position to make such an offer. I see no response to his suggestion from the hon. Member for Christchurch. It is Liberal Democrat presumption at its height.
	Amendment No. 17 attempts to reduce the amount of beer that is taken into account when assessing eligibility for a scheme by excluding exports. Whatever its merits, it would have the fatal drawback of being outwith EC law, the very law that Opposition Members pray in aid in relation to the higher limit and the very law that governs the scheme.

Chris Bryant: Is it not also true that the argument of the hon. Member for Henley (Mr. Johnson) holds water, or perhaps beer, only if Brakspear is determined that any competition from microbreweriesthose we are keen to supportwill be a problem for it, so it is trying to prevent competition?

Paul Boateng: I must maintain my self-denying ordinance and not comment on the tax arrangements for specific sectors and companies in the industry, but my hon. Friend makes a trenchant point in his usual trenchant way.

Roger Casale: I simply want to confirm to the Minister that I have today spoken to the Society of Independent Brewers, and it has confirmed that this measure will help independent brewers to survive and flourish. Furthermore, they have been fighting for this measure for over 21 years; indeed, this Bill will amend the Alcoholic Liquor Duties Act 1979. Year after year since then, at Budget time the society made suggestions to Conservative Governments, but those suggestions were rejected and the society was not listened to. Now we are introducing the measure that will help independent brewers, and that is exactly the moment when the hon. Member for Henley (Mr. Johnson) opposes it.

Paul Boateng: I am very grateful to my hon. Friend. I could not have put it better myself. On that note, I ask the Committee overwhelmingly to reject the amendment.

Christopher Chope: The Minister says that amendment No. 17 would not work because of European law, so obviously I accept that and I will seek to withdraw the amendment.
	The problem would not be so bad if the limit were lifted from 30,000 to 200,000 hectolitres. I am disappointed that the Minister has not addressed the point about small local breweries. The Ringwood brewery is a small local brewery; it is also a successful brewery, which is why it can produce as much as it does with only 44 employees. If the Minister takes the view that a brewery with 44 employees is the equivalent of a regional or international brewery and should be exposed to unfair competition from much smaller breweries, he has failed to address the arguments. Ringwood is a founding member of the Society of Independent Brewers and of the campaign for progressive beer duty, and it falls pretty hard on it now to find itself disadvantaged by the measure.
	The Minister was unfair to my hon. Friend the Member for Henley (Mr. Johnson), because he was articulating the views of the management of that fine brewery, Brakspear, not off the top of his head but as they were expressed in a press release on 19 April. Jim Burrows, the chief executive, said:
	This clumsy tinkering with beer duty could eliminate the very British heritage the Chancellor claims to defend.
	He went on to say how vulnerable his firm will be to unfair competition from microbreweries.
	The Government are obsessed with microbreweries' competition with slightly larger breweries, such as Ringwood and Brakspear. The biggest problem in brewing and the pub trade is the dominance of the very large breweries. By accepting amendment No. 4 and the other consequential amendments, the Minister would enable this great cohort of expanding independent brewers to expand even further and to make an even larger collective impact on the market. They would be able to take on the large breweries that get a great deal of protection because they can offer deep discounts.
	I am disappointed by the Government's response and the fact that they have not listened to our points; I hope that the Committee will vote for amendment No. 4 and, when it has a chance, will look at early-day motion 1047, to which the Minister did not refer; 61 Members support a duty on production of up to 200,000 hectolitres, with a concession for brewers producing beer less than that volume. The signatories include quite a lot of Labour Members; it will be interesting to see whether they join the Minister in the Lobby or vote for amendment No. 4, which is consistent with the early-day motion.
	On that basis, I beg to ask leave to withdraw amendment No. 17.
	Amendment, by leave, withdrawn.
	Amendment proposed: No. 4, in page 112, line 2, leave out 30,000 and insert 200,000.[Mr. Chope.]

Question put, That the amendment be made:
	The Committee divided: Ayes 206, Noes 316.

Question accordingly negatived.
	Schedule 1 agreed to.

Clause 19
	  
	Registered vehicles etc

Question proposed, That the clause stand part of the Bill.

Howard Flight: I would expect cross-party agreement on the need for effective measures to deal with the problem of abandoned cars, of which there are some 350,000 each year. The Government's proposals amount, broadly, to clause 19, which implements the terms of schedule 5.
	The crucial issue is whether the proposals will be effective. The problem of abandoned cars is growing because scrap yards are not interested in taking clapped-out cars and tend to demand payment for doing so. In turn, that has resulted from the fall in scrap prices. There has been broad support for the DTLR consultation and broad agreement that measures are needed to incentivise and provide proper arrangements for the disposal of old cars, and to ensure that the keepers of cars are made responsible for the registration formalities of transfer and disposal.
	Without reform and implementation by the Driver and Vehicle Licensing Agency of a proper receipting system, clause 19 and schedule 5 will not satisfactorily address the problem of abandoned vehicles and could indeed compound it. At the heart of the matter is the fact that the DVLA does not have a records system that carries accurate real-time information to enable the tracing of vehicles' owners at the time of abandonment.
	The problem is major. There are some 12 million old vehicles on the road without proper registration papers. For example, the number of vehicles registered in 1989 totalled some 2.3 million, of which about 624,000some 27 per cent.are not accounted for. That takes into account all those that have already been scrapped or for which SORNstatutory off-road notificationhas been given.
	The DTLR has indicated that the schedule 5 measures, which clause 19 implements, may be used to pursue the last keeper on record if the car in question is not taxed or recorded as being off the road. Many of the cars making up the numbers that I have just cited will have changed hands several times through the back door or may be sitting on rotting land. We take the view that it would be a monstrous travesty for the last official recorded keeper of such a vehicle, who may be entirely innocent, to be accused and charged with non-payment of road tax and failure to notify that the vehicle is off the road, and even given speeding fines, when that person may be two, three or four people back in the vehicle's chain of ownership. Indeed, the measures could worsen the problem of car abandonment, as there is a greater incentive to dump non-roadworthy cars rather than store them on private land in order simply to avoid vehicle excise duty liabilities.
	If the proposals are to be practical and not potentially unfair, the DVLA must be reformed significantly and be in a position to issue and record accurate receipts of information about change of ownership, so that individuals who have duly notified it of changes have evidence to show that they have done so. I understand that a recent court case on that territory found against the DVLA. Hon. Members will be aware that the Automobile Association has advised that it would be wrong to press ahead with the proposals until the DVLA can offer a real-time customer service and provide receipts on change of ownership.
	There are other problems. The liberal UK vehicle registration system allows any name to be recorded as the keeper, even a child's, which can make deliberate false registration relatively easy. If the proposals are to work, we need a timetable on DVLA modernisation. Vehicles that have not changed hands since March 1997 have old registration papers, which do not provide for dual registration. Again, that issue needs to be dealt with if clause 19 and schedule 5 are to be implemented fairly and effectively.
	The abandonment problem requires a carrot-and-stick approach. It also probably needs the provision of easy and free take-back facilities for cars that have reached the end of their lives, and it needs effective but fair pursuit of the owner at the time cars are dumped. That can happen only if the DVLA has the necessary records.
	Is the intent of clause 19 and schedule 5 to include veteran cars and cars that may have been kept on a farm all their lives? I still find the wording unclear, but there is the implication that both might be covered.
	We believe that much more consultation is necessary, especially on the detailed proposals in schedule 5, which if implemented as they stand could have a contrary and grossly unfair impact on innocent parties. We fear that the Government may be rushing through measures in the name of spinto be able to say that they are doing something about abandoned vehiclesand without reforming the DVLA to ensure that the necessary information is available.
	We would like to hear that the Government will consult further before they implement clause 19, noting the latitude given to them in terms of implementation, and that in principle they do not intend to implement the clause and schedule 5 until the DVLA has been reformed adequately. We will want to return to this issue on Report. If the issues that I have raised are not satisfactorily addressed, we will want to oppose the proposals, but we cannot imagine that the Government intend to implement these measures without the necessary reforms of the DVLA.

Edward Davey: The Liberal Democrats sought to have clause 19 debated in a Committee of the whole House because we are extremely concerned about the problem of abandoned vehicles. We recognise that the Government have taken action and that the clause is part of the strategy for dealing with the problem.
	My constituency of Kingston and Surbiton has experienced an epidemic of abandoned vehicles, which has caused huge problems for many residents. They are literally fed up of contacting the council or the DVLA and getting nowhere. I have many examples. [Interruption.] Unfortunately, the hon. Member for Buckingham (Mr. Bercow) says that it is a Liberal Democrat council. It is a Liberal Democrat council now because last Thursday the Liberal Democrats made 11 gains and took over from an incompetent minority Tory administration in Kingston upon Thames. As we now have a Liberal Democrat administration in Kingston upon Thames we will see improvements in the removal of abandoned vehicles.
	The problem of abandoned vehicles is exceptionally serious, as such vehicles give rise to significant health and safety concerns. Children are often hurt playing on them, and they are sometimes set alight by vandals, causing significant damage. The Financial Secretary and the Paymaster General should therefore not make light of this serious issue. To some hon. Members, it may seem like pavement politics, but it is a real issue.
	The Government are to be congratulated on the consultation documentpublished last October by the Department for Environment, Food and Rural Affairs and the Department for Transport, Local Government and the Regions, to which I responded on my party's behalfwhich proposes various ways of tackling the problem of abandoned cars. It contains many measures that I support, such as reducing notice periods for the removal of abandoned vehicles, and for their destruction once removed. I am particularly in favour of empowering local authorities to remove unlicensed vehicles; currently, such powers lie only with the DVLA. As the DVLA is rather stretched and does not have as great a local presence as councils, unlicensed vehicles often remain undealt with. Under current legislation, local authorities cannot deal with such vehicles because they are not abandoned. Bizarrely, the problem is ping-ponged between statutory agencies, one passing the buck to the other. The Government have recognised that fact in the consultation document and are taking steps to deal with it.
	Another key proposal that I fully support is giving local councils greater access to the DVLA's database, which I have advocated for my constituency for many years. I once persuaded the then head of enforcement at the DVLA, Haydon Madoc, to travel from Swansea to witness the epidemic of abandoned vehicles in my constituency. One solution that I discussed with him was enabling my local council to access the DVLA's database. It took a long time, but I believe that that key solution is now in place.
	The consultation document contains many useful proposals, and although the proposal before us is a step in the right direction I have some concerns about the detail. I make that point in a spirit of genuine, constructive and effective opposition. The document states that the Government wanted to consult widely, and it mentions some of the measures now included in clause 19 and schedule 5, but it describes them as longer term. I shall quote from it to give hon. Members an idea of the Government's thinking last October. Paragraph 36 of section 5, headed Longer term proposals, states:
	In the longer term, the Government believes that stringent measures are needed to ensure that all vehicles can be associated with a registered keeper who has clear responsibility for ensuring that the vehicle is operated legally, and who remains responsible for civil and criminal penalties arising from misuse of that vehicle while it is in his possession.
	The document predicts that the Government will consult on the measures before us, but to my knowledge their conclusions have not been published. They have not responded to the consultation process, or to submissions from people such as me.
	I share the concerns of the hon. Member for Arundel and South Downs (Mr. Flight) that the Government are ploughing ahead without hearing the results of the consultation. They may be going in the right direction, but as long ago as October we were told that the changes were longer-term reforms on which the Government would consult. I should like to see the results of the consultation before we enact the new powers.
	Clause 19(2) says that the provision
	shall not come into force until such day as the Secretary of State may appoint by order made by statutory instrument.
	Therefore, the Government are allowing extra time for consultation. They have produced the enabling legislative framework and will introduce the orders bringing the provisions into effect later. The Government may have realised that they are acting too quickly, but there is a protection against that in clause 19(2). If that is the case, I would like the Minister to say so. When will the Government introduce the orders in question? Will it be before the summer recess, and what will happen before the orders are considered by the House? We need to know, because they could implement significant changes.
	The Government need to consult on the orders beforehand. It is right to require people to retain fiscal responsibility for a motor vehicle unless and until they register the fact that they have sold the vehicle or it is no longer used on the road. However, if the Bill is passed, it will be the first time that VED will apply to vehicles not kept on the public road. What will that mean in practice? Will it mean that all the exemptions that currently applywhether to classic cars or any of the other long list of exemptions in schedule 2 (a) to (q) of the Vehicle Excise and Registration Act 1994, which I shall not list but which includes vehicles used on tram lines and electrically assisted pedal cycleswill continue to apply? I hope that the Minister can assure us that they will.
	The effect of the provision will be to enable excise duty to apply to vehicles not kept on public roads. I hope that that is only a device to ensure that abandoned cars that are not on the public road have to be registered so that the owner can be tracked down and held liable for any fines. Can the Minister reassure us that the Government have no intention of extending the tax net? If that is the object of the exercise, many right hon. and hon. Members will object.
	The most serious concern is whether the proposals introduce an element of retrospection. Many people in the last 10 or 20 years might have passed on a vehicle to a relative or friend but not registered the change in ownership properly and, when the change took place, the extra duties and penalties were not in force. Those people could be linked to one of the many millions of vehicles no longer on the DVLA's register and thus fall foul of the new legislation. The Government need to convince the House that they will not apply those provisions in a draconian way.
	The Minister could reassure the Committee by saying how many licensed vehicles are on the DVLA register. Of that number, how many have statutory off-road notification? For how many vehicles has there been no recent activity or registration? A note from the Library leads me to understand that there may be as many as 2 million vehicles in the latter category. As a result, if we are not careful, 2 million owners could become liable for fiscal penalties under this retrospective measure.
	The matter is complex. I read through the 1994 Act and must admit that I had to put a hot towel around my head to understand its intricacies. However, it is clear that some proposals in the Bill may not have been thought through as completely as might be necessary.
	My final point touches on a matter, raised by the hon. Member for Arundel and South Downs, that is key to the Government's aim of using the Bill to deal with abandoned cars. The hon. Gentleman noted that the DVLA does not provide receipts when cars are registered: a person who notifies the DVLA that a car has been sold on receives no receipt for that notification.
	The problem was at the heart of the court case to which the hon. Gentleman referred. In November last year, Mr. Phil Davies from south Wales took on the DVLA in the magistrates court, the county court and the Court of Appeal. Eventually, he won the case. The DVLA had tried to fine Mr. Davies 35 for not returning a form in July 2001. Mr. Davies was adamant that he had returned the form, but he cold not prove it as the DVLA issued no receipt for it. However, the Court of Appeal finally found in favour of Mr. Davies, on the grounds that the DVLA had been remiss.
	If the Government are trying to use the Bill to deal with the problem of abandoned cars by developing continuous licensing, they will probably enjoy the support of the House. However, the problem with continuous licensing is that the DVLA would need to work out how to provide receipts for those members of the public who wanted to receive them. The receipts would prove that a person had notified the DVLA of a transfer of ownership.
	I suggest that the question of issuing receipts is at the core of the clause. I hope that the Minister will assure the Committee that the Government will take on board the legitimate concerns that have been expressed. If they do, they will enjoy the support of hon. Members of all parties. The move is important, and such an assurance would allow the Government to promote the objectives of their policy that much more strongly.

Greg Knight: Abandoned cars are a blight on the landscape, and action is clearly needed. Some local authorities find the cost of dealing with the problem to be great. I do not see why local council tax payers should have to foot the bill when irresponsible citizens dump their property in public places. Therefore, I begin by saying that I wish the Government well in their quest for a solution to the problem, but I share some of the doubts expressed by my hon. Friend the Member for Arundel and South Downs (Mr. Flight) about whetherI hope that the Minister will pardon the punthe proposed measure is the correct vehicle for dealing with the problem.
	The proposal seems rather akin to a sledgehammer. Will the Minister say why the Bill does not contain a requirement that the duty would be payable only when a vehicle had clearly been abandoned, or left on a public highway or on public land? I am worried about the scope of the provisions. I hope that the Minister will be able to reassure the Committee that my fears are groundless.
	Clause 19 refers to schedule 5 of the Bill, which provides
	for vehicle excise duty to be charged in respect of vehicles registered under the Vehicle Excise and Registration Act 1994 that are neither used nor kept on a public road,
	for vehicle excise duty to be charged in respect of things that have been but have ceased to be mechanically propelled vehicles.
	Does the phrase to be charged necessarily mean that a fee has to be charged? Alternatively, when a particular class of registration under the 1994 Act gives rise to payment of a nil duty, would the clause also give rise to payment of a nil duty? My concern is about historic, classic and veteran vehicles. Not every Member may be aware that such vehicles are classified under a different category.
	Most right hon. and hon. Members who travel to this place by car do so in a vehicle that is registered under the class private light goods. To put that vehicle lawfully on the road, one has to pay an annual fee to obtain one's tax disc. In 1994 or 1995, when my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was Chancellor of the Exchequer, a new provision was introduced whereby a vehicle that was roadworthy but was more than 25 years old could be classed as 25 year exempt. That category has since been renamed historic. Owners of vehicles manufactured before 1 January 1973 must still go through the process of producing their insurance documents and MOT certificate for their vehicle to obtain a tax disc, but they do not pay a fee for it.
	It used to be the case that as soon as a vehicle became 25 years old, it was entitled to claim exempt status, but the present Chancellor of the Exchequer froze the exemption so that only vehicles manufactured before 1973 can claim historic status. It is not automatic, however: the owner must go through the process of changing the taxation class on the logbook. Will the Minister give us an assurance todayor if he cannot, will he look at the issue and come back before Reportto make it clear that it is not the Government's intention to use the clause to introduce taxation on historic vehicles that currently pay a nil duty?
	The Bill's wording gives me cause for concern. The provisions will catch not only the historic vehicle owned by a member of the public but every vehicle housed in a motor museum or other historic collection. Many of those vehicles are not in working condition. They may look pristine, but in many cases the engine or part of the fuel system has been removed, usually for insurance purposes.
	I hope that the Minister is prepared to say that the Bill is not intended to hit those who own, maintain and cherish historic vehicles, and that it will not do so.

Paul Boateng: We should, I suppose, be grateful to the hon. Member for Kingston and Surbiton (Mr. Davey) for giving us the opportunity to debate the clause. However, it is always the way with Liberal Democrats that even as they enable us to share with the wider world the benefits of an action taken by this Government alone to tackle the menace of dumped and abandoned cars, one is struck by the piety, self-satisfaction and smugness that all too often, I am afraid, characterises Liberal Democrat interventions in any debate. I am afraid that this debate is no exception.
	I detected something else that all hon. Members who are to serve on the Standing Committee will want to bear in mind. I am thinking particularly of the shadow Chief Secretary, the hon. Member for Buckingham (Mr. Bercow), who will share our many hours of deliberation on these matters. As Liberal Democrat Members share their reflections in Standing Committee, we will find time and again that every word they utter is designed to be replicated at street level in Focus. The hon. Member for Kingston and Surbiton gave that impression: I sensed Focus coming on. It is therefore only right, to lighten the hours that lie ahead of us, that we should introduce what I would describe as Focus-watch. A prize should be initiated for the member of the Standing Committee who is able to identify the most frequently repeated strictures that show a direct link with subsequent publication in Focus.

Roger Casale: I am grateful to my right hon. Friend for giving way. He has issued the sort of challenge that I find almost irresistible. However, I should tell him that the hon. Member for Kingston and Surbiton (Mr. Davey) is genuine in his desire for measures to aid the removal of abandoned cars. His constituency borders mine, and he has visited with me abandoned and dumped cars in New Malden on my side of the border. I have done likewise on his side of the border. I hope that the support that he gives to the measures that we are taking to deal with the problem through the tax system will be replicated when we discuss the other measures that we are taking to make it easier for local authorities and other bodies to work together to remove abandoned carsan exercise in joined-up government to tackle this pernicious problem in our communities.

Paul Boateng: Liberal Democrats are often genuinethey have a genuine desire to see their good works replicated in Focus. I promise to donate to the member of the Standing Committee who identifies the most frequent references for subsequent publication in Focus one twentieth of a hectolitre of real ale produced in a micro-brewery of their choice, in any constituency. I fear that I must exempt Liberal Democrat Members from that genuine prize, because that would undermine the whole point of it.
	With that challenge, I turn to the substance of the points that the hon. Member for Kingston and Surbiton raised. Hon. Members on both sides of the Committeemy hon. Friend the Member for Wimbledon (Roger Casale) rightly drew attention to the no doubt genuine concern of the hon. Member for Kingston and Surbitonhave long been worried about the menace of dumped vehicles. We issued a consultation paper on the matter. As the hon. Gentleman should know, in March this year the summary of responses to that paper was published and placed in the Library. It was entitled, perhaps not surprisingly, Report on responses to the consultation paper on Abandoned Vehicles 20012002.
	The provision must be seen in the context of the wider range of measures for tackling the problem of abandoned vehicles announced by my right hon. Friend the Secretary of State for Transport, Local Government and the Regions on 10 April. They include powers to remove vehicles abandoned on the street anywhere in England after 24 hours, instead of the present seven days; increased opportunities to work with the DVLA to remove unlicensed cars; powers to dispose more quickly of unlicensed vehicles removed under DVLA powers after seven rather than 35 days; and easier tracing and clarification of vehicle ownership through additional funding from the invest to save Budget. That will be seen as a comprehensive response to the menace.
	I want to reassure the hon. Member for Arundel and South Downs (Mr. Flight) and the right hon. Member for East Yorkshire (Mr. Knight) that the new measures in no way affect current policy on vehicles that are exempt, for whatever reason, from payment of vehicle excise duty. That includes classic cars manufactured before 1973. The right hon. Gentleman has a distinguished track record as regards his interest in the preservation of historic cars. Keepers of classic cars who want to take their vehicles off the road, thus paying no duty, will continue to be able to do so, provided that they make a statutory off-road notification, as required at present. There is no intention to bring classic cars into taxation. I hope that reassurance sets minds at rest.
	The hon. Member for Arundel and South Downs suggested that DVLA systems might not be capable of handling the proposed change. The DVLA makes strenuous efforts to ensure that the information on its vehicle record is as up to date and accurate as possible. However, we are all fallible; there is always the risk of mistakes at the DVLA, as there is in every human institution. Most vehicles are relicensed at post offices and errors might also be made there. We are taking steps, including the piloting of measures such as the use of bar codes on licensing reminder forms, to ensure that the vehicle record can be updated instantly when the vehicle is relicensed.
	We have no intention of hitting the honest trader or dealer. If the vehicle is taxed, or if the DVLA has been notified of changed circumstances that mean that tax is no longer due, there is no risk that an offence will be committed. I do not accept the charge that this is a motorist-bashing measure, although, to be fair, I do not think that the hon. Member for Arundel and South Downs was making that claim.
	The measure is certainly not designed to catch people who have genuine reasons for licensing their vehicle a few days late. We are not out to hit the honest motorist, but we believe that the motorist who plays by the rules has everything to gain when those who abuse the system are brought to book. Honest motorists will welcome the reforms. Motorists are citizens, too, and they are affected by that abuse.
	The hon. Member for Arundel and South Downs asked what would happen to vehicles currently wrongly recorded, and said that it was unfair to go after the keepers. It is not our intention to act against keepers who have acted in good faith. We shall need to consult with motorists' organisations and others on the best and fairest way to implement clause 19. It is our intention to consult. We shall focus our attention on ensuring that vehicles that are correctly recorded do not become incorrectly recorded.
	The hon. Member for Kingston and Surbiton asked about issuing receipts; that suggestion could certainly be considered as part of our further consultation. I repeat that we recognise the need to protect the keeper who acts in good faith.

Howard Flight: In addition to vintage cars, I raised the issue of cars that are used on farms. May I also ask what would be the position of firms whose business is dealing in second-hand cars? I understand that, under the measures, in future they would need to pay VED while such cars were on their forecourt pending sale.

Paul Boateng: I will certainly write to the hon. Gentleman on the latter issue. I believe that in his speech he referred to vehicles that have lived on farms all their lives, which raised the spectre of Chitty Chitty Bang Bang. I am sure that, with this measure, it is not our intention to bring into the arena those vehicles that were previously outside it, but we must ensure that we have an effective regime, whose integrity is respected. I will write to the hon. Gentleman on those points to ensure that we get things absolutely right.
	Bearing in mind our intention to ensure that we get the clause right and to consult with the motoring organisations and others on the detail of its implementation, I am sure that, on reflection, hon. Members will find that it has much to commend it. Before finalising the details of the system and bringing it into effect, we will consult on the implementation of a supplementary penalty for late renewal or non-renewal, and the levels of that penalty. Those will be subject to affirmative resolution, and the House will have an opportunity to debate them in due course.
	We are adding this measure to the series of practical measures that are being taken to address a menace that, we have all agreed, can be the bane of our constituents' lives. It degrades the quality of life in all too many communities and is a spur to crime, including arson and vandalism. Action in this area is long overdue and I commend the clause to the Committee.

Edward Davey: I am grateful for the Financial Secretary's reply, which has reassured me on many points. I am glad to hear that he is consulting. When he and his colleagues and officials consult, will they particularly look at retrospection, which he was not able to deal with in his reply?
	Will the Financial Secretary deal with another issue? I have been told by people in the AA that it is an increasing practice for people to register vehicles at an address that they do not live at. The solution is not legislative change but tighter practices governing registration at post offices or by post to the DVLA to ensure that identity is checked more rigorously. I hope that the Financial Secretary will ensure that that point is also covered in the consultation.
	Question put and agreed to.
	Clause 19 ordered to stand part of the Bill.
	Schedule 5 agreed to.

Clause 23
	  
	Flat-rate scheme

Question proposed, That the clause stand part of the Bill.

Paul Boateng: The clause represents the latest and, I believe, the most significant step that we have taken to simplify the administration of VAT for hundreds of thousands of small businesses.
	Since VAT was introduced, the vast majority of registered firms have been obliged to keep a record of the VAT charged on each individual purchase and sale, and go through the often laborious process of totting up their inputs and outputs when filling out their VAT return. The flat rate that is being introduced on 25 April does away with that requirement for more than 500,000 small businesses with turnovers of up to 100,000. Instead, those businesses will have the option to work out their VAT liabilities as a simple percentage of their total turnover. Instead of making hundreds of calculations each quarter, they will simply have to make one. Instead of spending hours sorting through old receipts, they will be able to concentrate on running their business.

Christopher Chope: Will the right hon. Gentleman give way?

Paul Boateng: May I just develop the argument a little? We estimate that, by reducing the time that those businesses spend filling in forms and reducing their reliance on accountancy services, the scheme will cut compliance costs for the average business by up to 1,000 per year.

Christopher Chope: Does this scheme already apply beyond the 32,000 small manufacturers, 15,000 small agricultural firms, 11,000 small pubs and 22,000 transport companies that, I have been informed, are the only beneficiaries of the scheme at the moment?

Paul Boateng: I do not quite follow the point. The scheme, which I should have thought anyone would welcome, reduces for 500,000 small businesses with turnovers up to 100,000 the burden of making those calculations and digging out old receipts. If the hon. Gentleman suggests that we should be doing more, he is of course entitled to say that, but to him must go the question, What did you do when you had the opportunity to make a difference by relieving this burden on small businesses? and answer comes there back, Not very much. I do not think, therefore, that at this stage it would be right for the hon. Gentleman to cavil at what the Chancellor announced in the Budget, because what

Christopher Chope: rose

Paul Boateng: The hon. Gentleman will have his opportunity.
	What the Chancellor made clear in his Budgetin response, in some sense, I suppose, to the point that the hon. Gentleman makesis that we intend to go further next year, extending the scheme to a further 200,000 businesses with turnovers of up to 150,000. Therefore, from next April the scheme will be available to some 700,000 small firms in total: more than 40 per cent. of all VAT-registered businesses.
	This is one issue on which it should be possible for the whole House to say, Good; there is something here that is of benefit to small and medium-sized businesses and not something to cavil about. Anyway, we shall find out when we hear Opposition Members' speeches.
	Let me give the Committee a sample of the reactions that the Budget announcement has received from individual businesses. Jamie Rowland, who set up a bike repair shop in Gwynedd in Waleshe did so last year, so he is still wrestling with the issuessaid:
	The extension of the flat-rate VAT for small business will definitely help me and others, because sorting out VAT takes up a lot of time. The more time I can put into the shop in the early days the better.
	Joanna Marshall, who runs a business designing and making ties in Nottingham, said:
	I think this is an excellent idea for small businesses. I set up my company two years ago and there is a lot to learn. Taking away a burden like this will make a big difference.
	This valuable and radical measure has been much welcomed by small businesses and their representative groups. It will remove a compliance burden that has been in place for the past three decades. In that spirit, I commend it to the Committee.

Christopher Chope: I am sorry that the Financial Secretary mistook my request for information as cavilling. I asked him for information because I have an article written by someone called Richard Murphy and I was unsure whether what he states in his article represents a misunderstanding. However, he asserts that
	the scheme is only available to 32,000 small manufacturers, 15,000 small agricultural firms, 11,000 small pubs and 22,000 transport companies,
	making a total of about 80,000 firms. Yet the Financial Secretary referred to about 500,000 small firms, so has Mr. Murphy got it wrong?

Paul Boateng: Mr. Murphy is absolutely right to identify four categories in that 500,000, in giving an approximation of the numbers concerned.

Christopher Chope: I am grateful to the Financial Secretary for that information. Is Mr. Murphy also right to imply that no other group of firms yet qualifies?

Paul Boateng: Mr. Murphy is not quite right. Slightly more than 500,000 small businesses in all sections of the economy will benefit from this measure.

Christopher Chope: I am grateful to the Financial Secretary for that clarification. I hope that he will now be equally helpful in answering a question that has been asked by someone whose daughter owns a hairdressing salon in a small town. He says:
	Under current VAT rules she pays to Customs  Excise around 7,500 per annum on a turnover approaching 70,000 after deducting the VAT on her supplies etc., and in her own spare time keeps all the required books and receipts.
	He says that under the
	new scheme she would not keep any records, but would have to pay about 9,000 to Customs  Excise. What sort of help is this?
	He questions how a scheme has been designed that is
	meant to help someone where they end up paying more
	and how has it been worked out
	that 13 per cent. of turnover would be less than anyone's current VAT payment
	in the hairdressing business. He also says:
	To be of any help to my daughter the flat rate for hairdressing should be about 10 per cent., which would leave her about 500 better off. She could then give herself a pay rise of 10 a week, something which she has not had for the last 4 years.
	I make no political point, but I hope that the Financial Secretary can deal with that specific example.
	If the scheme turns out to provide a significant reduction in the burden on business, it will be very welcome. I notice that the estimates as to exactly how much time will be saved have changed significantly from the earlier estimate, but any time that small businesses save is valuable and worth while. However, I should be grateful to the Financial Secretary if he could explain what happens in relation to the records that have to be kept for income tax and corporation tax purposes. If a firm does not have to keep VAT supply invoices for the purposes of VAT accounting, is it exempt from having to keep them for other accounting purposes? If not, what is the purpose of the exemption? Again, that issue has been greeted with some scepticism by several people involved in the very important small business sector.

Edward Davey: We welcome the clause.

Paul Boateng: Let me deal with the hypothetical question asked by the hon. Member for Christchurch (Mr. Chope) in relation to the need still to collect receipts for other taxes. There will still be a need to do that because VAT is a real-time tax; people will not need to collect receipts for that purpose, but they may well have to collect them for another purpose.
	The specific issue is that small businesses are understandably concerned that they are collecting the tax on our behalfthat we are using them as tax collectors. We are recognising that fact and saying that, because VAT is a real-time tax, they do not have to collect receipts for that purpose, but they may well have to do so for the other purposes.
	The hon. Gentleman's specific example of a hairdresser strays into individual tax concerns. I do not feel that it would be appropriate for me to give advice on such matters at the Dispatch Box, but I will happily ensure that Customs and Excise writes to him, or indeed to the individual taxpayer, to outline the proposal's impact on that individual. However, Customs and Excise has given me an illustrative example of the categories of people who would benefit from this measure, and it estimates that hairdressers will save about 1,000 in compliance costs. As that information does not relate to the hon. Gentleman's specific example, it is right to share it with the Committee, but I shall write to the hon. Gentleman about it in the way that I have outlined.
	On the general point about small businesses paying more tax, the proposed flat-rate scheme will operate on an optional basis, so only those businesses that believe they will benefit from joining the scheme will opt to take part. Therefore, some businesses may well say that they do not want to take part in the scheme because they and their accountants have calculated that it would not benefit them to do so. Businesses that do not believe they will benefit can continue to account for VAT in the way that they always have done.
	The rates have been calculated to produce a broadly revenue-neutral outcome in each sector, but that clearly means that there will be a net reduction in the amount of tax many businesses pay, as well as significant compliance cost savings. For all those reasons and bearing in mind the general, broad welcome that the measure has received in all quarters, I commend it to the Committee.

Roger Casale: I wish to make two or three brief comments on the clause. I welcome the new measures, and I am pleased that the Opposition welcome them too, but I rise to speak because the welcome has been distinctly tepid and lukewarm from the Opposition Benches. If the truth were known, there is probably quite a lot of repressed enthusiasm for the measure. After all, it will save small businesses much time and cost. Small businesses make up a growing part of our economy, especially in the service sector, and are great creators of employment.
	That is certainly the case in my constituency, as I know from my dealings with the Merton chamber of commerce, the Wimbledon business group and other small businesses, not least Ad Hoc Business Support, which helps me in my work when I have a particularly heavy case load. I have seen that business grow in the past three to four years. One of the things that held it back initially was the onerous task of having to work out its VAT liability. Indeed, being eligible for VAT at all held it back in the early stages. Increasing the threshold and introducing the flat-rate scheme will save that and similar businesses a great deal of time and could save it up to 1,000 a year, which will make a difference to its competitiveness. I hope that that will underpin such companies' future success.
	My second reason for wanting to speak in favour of the new measure is that it is part of a series of measures that the Government are taking to boost competitiveness and to support small businesses. For example, there was a recent statement by my right hon. Friend the Chancellor of the Exchequer on the reduction of bank charges for small businesses. There are many thousands of small businesses in my constituency, and they will disagree with us about some things, but on the other side of the equation they will also recognise that we are taking a raft of measures, of which this is one, that demonstrate that we are on the side of small businesses, that we want to support them and that we will make the necessary changes to the tax system, as we are doing now in relation to VAT, to cut red tape and to cut business costs. All of that has come from the dialogue between this Government and the small business community, which was completely unknown under the previous Administration. In that regard, I mention the work of the Small Business Council in particular.
	I was in touch with the Federation of Small Businesses just today, and it welcomed the measure. It has always made the point that many small businesses feel that they have the onerous task of acting as tax collectors in relation to VAT. This measure demonstrates that we have taken their concerns on board. The small business community wants to work with the Government to improve things, not just in its own interests but because it recognises, as we do, that small businesses will continue to drive our economy in the future and create jobs, and that, by working together, we can reach a solution that works for everybody.
	I very much welcome these measures, which come out of that dialogue between the Government and business. As I said, they are one more demonstration of this Government's support for and commitment to the small business community, and our determination, when possible, to introduce the changes necessary to make small businesses more successful and more competitive in the future.

Mark Hoban: I welcome the introduction of a flat-rate scheme for small businesses, although I want to raise one concern in that regard.
	One of the issues that small businesses in my constituency have raised with me in recent months is the administrative burden of VAT. Any action taken to lift that burden will be welcomed by those businesses. My only caveat is the process by which the flat rate is set for particular businesses, and what consultation there has been with trade bodies on whether that rate is appropriate. One of the issues that small businesses will considermy hon. Friend the Member for Christchurch (Mr. Chope) referred to the circumstances of a hairdresser who would lose out as a consequence of adopting the flat-rate schemeis whether they would feel obliged, on a regular basis, to calculate their VAT liability if they did not elect to use a flat-rate scheme. Would compliance costs continue because businesses would feel the need, every so often, to re-check whether they would be better off using the flat-rate scheme or the more conventional scheme?
	I hope that the Financial Secretary will speak to trade representatives to ensure that the flat rate that is set is relevant to those businesses and encourages them to take advantage of it, so that they benefit from the lower compliance costs on offer through this scheme.

Mark Field: I, too, would like to speak briefly on this point. I am sorry that the hon. Member for Wimbledon (Roger Casale) feels that the Opposition's support for this measure is somewhat tepid. In principle, we are comfortable with the measure, which is a positive step forward. The small business sector, in which I operated prior to joining the House, has not been terribly well served by this Government. It is not fair to say that there is a monopoly of good will towards the small business sector on either side of the political divide. It is fair to say, however, that, in essence, these changes, although welcome, represent only a small part of the burden faced by many small business people.
	VAT is one matter on which I have spoken previously in the HouseI always felt that I was one of the worst paid pro bono for my tax-collecting skills when I dealt with VAT in my businessand it is an important fund raiser for the Government. There are great concerns, however, about the amount of time that must be spent by any small business man on the various other payroll taxes, which are not affected by the measure.
	Much as I understand the Government wishing to make much of this measure, it is very small. As has been pointed out in various interventions, there will no doubt still be a great burden on many small business men in terms of having to deal with receipts for Inland Revenue purposes, if not necessarily for Customs and Excise. I would be interested, however, to receive guidance from the Financial Secretary on his comments to the effect that the whole process would be revenue neutral. Will he tell us which businesses are likely to suffer under the new provision?

Paul Boateng: I am very grateful to my hon. Friend the Member for Wimbledon (Roger Casale) for stressing the importance that the Government attach to consultation with industry, business and the relevant affected sectors. I first recall meeting him many years ago, when I was an Opposition Front-Bench spokesperson on Treasury affairs. If he was not then a parliamentary candidate, he was at least very active in Wimbledon, and he was noted, at a time when it was not as commonplace as it is now, as someone who always bothered to reach out to small businesses in his constituency and to learn and listen to their concerns. I have no doubt that that contributed to his subsequent success in 1997 and to his re-election last year. That is a lesson that the Labour party has learned, and that we sometimes had to learn the hard way in the years of opposition.
	We have been engaged in a process of consultation in order to arrive at these rates. In response to the points made by the hon. Members for Fareham (Mr. Hoban) and for Cities of London and Westminster (Mr. Field), the rates are based on information from previous VAT returns submitted by all traders who would be eligible to join the scheme. The rates have been calculated on the basis of producing a broadly revenue-neutral outcome across each sector. We consulted on all these rates, talked to the sectors concerned, and, in some cases, responded to the consultation by reducing the rates proposed for an individual sector. For example, we now have two rates for construction services, instead of one. That was a result of listening to the industry and its concerns to ensure that we got it right and that we met its needs.
	For reasons that hon. Members on both sides of the House have outlined, it would have been a nonsense to set a single flat rate for all small businesses. Either it would have been set so low that there would be a substantial loss of revenue, or so high that the sector would simply not opt to participate. We want businesses to have a real choice. The rate for a particular business will therefore depend on what trade sector it is in, but, clearly, there will be only one rate for each business. If a business is engaged in two or more sectors with different rates, the flat rate to be applied will be that for the main business sector based on turnover generated. The businesses and trade associations that we consulted felt that that was the best solution to this problem. I think that we have got it right, and we are determined to make sure that it is helpful to small businesses.
	As my hon. Friend the Member for Wimbledon said, the measure should be seen as part of a wider Government commitment to support small businesses and to promote an entrepreneurial culture. No doubt there is still more to be done, and we are determined to do all that is necessary to ensure that we have a culture that promotes the creation of jobs, that helps bridge the productivity gap, and that recognises the vital role that the entrepreneurial spirit plays in creating a sound and dynamic economy.
	I hope that, as a result of this debate, the enthusiasm thatas my hon. Friend pointed outConservative Members have so ably repressed will re-emerge. One does not often associate the hon. Member for Buckingham (Mr. Bercow) with repression in any sense of the word; his enthusiasms are normally plain for all to see. It is unusual for his enthusiasm to be as successfully repressed as it has been on this occasion. However, in the many hours that lie before us in Committee, we will no doubt draw out that enthusiasm. My hon. Friends the Paymaster General and the Economic Secretary cannot wait to have a go at drawing outrepressions may be going too farthe enthusiasms of the hon. Member for Buckingham. With that, I commend the clause to the Committee.
	Question put and agreed to.
	Clause 23 ordered to stand part of the Bill.

Clause 26
	  
	Charge and rates for 200203

Question proposed, That the clause stand part of the Bill.

Edward Davey: I and my colleagues wish to debate this clause because it goes to the heart of the Budget strategy and the choices that faced the Chancellor and his team in preparing the Bill and the Budget. We agree with the Government that extra resources are needed for the national health service and for public service investment in generalin our schools, police forces, transport system and care homes. There is a long list of where investment is needed, and there is some agreement that services, particularly the health service, have been deprived of essential investment for far too long. It is our understanding from the analysis in the Wanless report and from the brouhaha and trumpeting of the Budget that it is the Government's intention to find extra resources. We are delighted that, at long last, they have admitted that and have found the money.
	It is interesting that we are debating a clause that introduces the income tax charge and rates for 200203. On the same clause in previous Finance Bills, I and other Liberal Democrats have argued the case for extra investment in our public services, such as the health service and schools. We have led the debate and the political argument for extra resources funded by fair taxation. In previous Budgets, we have argued for the rates to be higher than proposed or to reverse the cuts that have been proposed in previous Finance Bills. We did that to try to ensure that precious resources were available for investment in public services.
	This year, the debate is slightly different, because the Government have found the resources in another way. The debate on this clause is about how we should find the resources and about which taxes should be increased so that we can put money into public services. As is well known, the Government have chosen to do that by increasing employees' and employers' national insurance contributions, and we differ from them on that point. We accept their objective of increasing investment, but we are concerned about their tax strategy and about the taxes that they have chosen to increase.
	Although we are forced by the procedures of the House to vote on clause stand part, we would ideally have liked the clause to contain a proposal to put up the basic rate of income tax by 1 per cent. to fund education investment. There should also be a new top rate of tax of 50 per cent. on incomes of more than 100,000 a year to raise the resources that are needed for the investment that we have talked about. Unfortunately, the procedures of the House do not allow us to table such amendments, so we have to signal our intentions by voting on clause stand part. That is what we have done in previous years, and our approach is totally consistent with that.
	Why are we suggesting a different tax-raising strategy from that adopted by the Government? If one compares the proposal for an increase of 1p in the basic rate of income tax with an increase of 1 per cent. in employees' national insurance contributions, we believe that it becomes clear that the income tax rise is fairer and more efficient. It is clear from the analysis carried out after the Budget by the Institute for Fiscal Studies and others that the rise in employees' national insurance contributions involves a narrower net and imposes a burden on a narrow group of people. It excludes pensioners and those who live off unearned income or who have substantial unearned income.
	Most pensioners would not pay the extra penny on income tax. They are not income tax payers, because of the age allowances. However, pensioners with substantial incomes would pay the extra penny in the pound and the wealthiest pensioners would pay the most. We are willing to argue the case that, if pensioners are wealthy, they should contribute as well. We believe, like the Government, that the poorest pensioners and those on modest incomes should be protected, and they would be protected under Liberal Democrat proposals just as they are under Government proposals. However, the wealthier pensioners would escape under the Government's proposals but not under ours. We do not see the justification for the Government's approach. In the Budget debate and on Second Reading, we asked them to justify why wealthier pensioners were excluded, but justification came there none. That means that we must debate the issue again tonight.
	More serious for the GovernmentI am sure that Labour Back Benchers, in particular, feel thisis the fact that those with a significant unearned income are excluded from the rise in employees' national insurance contributions. They are not being asked to contribute any more towards the health service, and that is difficult to understand. We agree with the Government that resources must be raised to turn round the years of underinvestment and underspending in the health service, so we should surely ask the better-off in society to make their contribution. However, the Government's Budget strategy deliberately excludes some of the wealthiest people in society, and that is why we stand firm in saying that a 1p increase in income tax is the best approach. It would ensure that everyone, particularly those with the greatest means, would be asked to contribute to a service that is provided to people equally and according to their need.

Chris Grayling: I do not want in any way to support the principle of tax increases. However, does the hon. Gentleman accept thatin contrast to the national insurance routehis argument would place an increased tax burden on, for example, a pensioner with an income of 10,000 to 12,000 a year? That burden will not occur if the Government proceed with their proposals.

Edward Davey: The hon. Gentleman is, of course, right. However, the amount of money asked from those on modest incomes would be relatively small because, as I am sure he will accept, income tax is a proportionate tax. People on low incomes will, by definition, pay a very small amount. Most pensioners do not pay income tax, because they are protected from it by the higher age allowances. Therefore, the vast majority of pensioners would not pay under our proposals.

Dawn Primarolo: I know the hon. Gentleman is aware that only four out of 10 pensioners pay tax, but is he also aware that nearly 3 million pay it at the 22p rate which, by definition, means that they are on a low income? He is proposing to hit that group of people on fixed low incomes. Only 230,000 pensioners pay the higher rate of tax. His argument about spreading the burden does not work because he would spread the burden disproportionately on pensioners on fixed incomes.

Edward Davey: That last phrase is incorrect. We are talking not about spreading the burden disproportionately, but about asking a wider group of people to pay. I am more than prepared to admit that the Liberal Democrats would ask more people to contribute than the Government are asking. I am not hiding that fact. Indeed, I was the person who raised it in the first place; it did not require an intervention to drag that information out of me. Our proposal is fairer. The extra amount that pensioners on 10,000 would have to pay would be tiny. Extremely wealthy pensioners, however, would pay much more under our proposals.
	I note that the Paymaster General did not say why wealthy people with a larger share of income from investment incomeunearned incomeshould be protected from making an extra contribution. It is extraordinary that they are not being asked to contribute to the important endeavour to put the health service in a sounder fiscal position.

Chris Grayling: The hon. Gentleman still misses the point about the financial predicament that many pensioners face. They have retired on fixed incomes, perhaps with a small pot of savings. The income from those savings has fallen as interests have decreased to an historically low level. They have experienced yearly increases in council tax which are vastly above the rate of inflation and have no ability to increase their income. So every time another slice is taken out of their income, it is another handicap to them making ends meet. That would be the consequence of the hon. Gentleman's proposal. It is easy to get caught up in an attempt to deal with the very small number of high earners, but the hon. Gentleman's proposals would have an impact on lower-income pensioners.

Edward Davey: I am glad that the hon. Gentleman mentions council tax. The Liberal Democrats are the only ones who have pledged to abolish council tax and to replace it with a local income tax. That would significantly help pensioners. They would be much better off as a result of the combination of our policies. The hon. Gentleman is right to say that many pensioners on fixed incomes are significantly hit by council tax. That is why we need to reform that pernicious tax, which his party introduced.
	The second part of the Government's tax strategy in the Budget is the 1 per cent. increase in employers' national insurance contributions. We propose a new top rate of tax of 50p in the pound on incomes above 100,000, which would raise an amount similar to that in the Government's proposal. Indeed, it would probably raise more on a net basis because the Government would not have to pay the higher tax for the many people who are employed in the health service and other public services. Our proposal would liberate an equal amount or more for public service investment. In addition, it would be fairer and more efficient: fairer because it would ask those people who can afford to pay to make their contribution, and more efficient because it would not increase the costs of business.
	We all know from the press reports and the analysis after the Budget how worried business is by the increase in its cost base because of the increase in employers' national insurance contributions. It is a real concern that that might hit jobs, investment and the competitiveness of UK plc. Once again, the Government have ducked out of the hard decisions. They have put a major burden on business when they had an alternative way to raise revenue. That is why I urge Members on both sides of the Committee to ask the Government to think again about their tax strategy by voting against the clause.
	The Committee knows that the Liberal Democrats have been consistent on this matter since, I think, 1989. That is 13 years of consistency on tax policy. In that time, we have argued for increases. Our plans have been fully costed and we have put them before the British people a number of times. Although a majority have not voted for them, some of them have proved in opinion polls to be the most popular policies. We believe that had the Government adopted them, they would have received much greater support and would not have lost the support of British business in particular.
	I do not know whether the Conservative Front-Bench spokesmen will participate in the debate, but if they do I hope that they tell the Committee how they will find the money for the NHS, our schools and our police. If they do not do that and then vote against the national insurance legislation, they are being disingenuousindeed, dishonestwith the British people. They say that they want to back the money for the health service, but they do not will the means. Both before and after the Budget, we stood by our election manifesto proposals of June last year to show where the money would come from to pay for our policies. Like the Government, we think that the investment is vital. The Conservatives have yet to produce proposals on that.

John Bercow: The hon. Gentleman is uncharacteristically confused. For the avoidance of doubt, I put it on the record, as has been articulated by my right hon. and hon. Friends before, that it is the position of the Conservative Opposition that although this country needs to spend more on health, it is by no means clear, through an examination of the systems of health provision across continental Europe, that that expenditure is best made on the basis of moneys raised through tax. Unlike the hon. Gentleman, who has a closed mind, my hon. Friends and I have open minds. We will explore the alternatives, see what is best and produce a credible, detailed, costed and attractive alternative to the failures of the Government, which is a damn sight better than the Liberal Democrats have ever managed.

Edward Davey: I am delighted to have provoked the hon. Gentleman. That is what I intended to do, but he has failed to clarify the Conservative party's policy. As usual, he promised us that some day soonor perhaps not so soonwe will hear how they propose to raise the billions of pounds.

John Bercow: rose

Edward Davey: I will give way if the hon. Gentleman holds steady for a moment.
	It is all right for the hon. Gentleman to say that the Conservatives will clarify their policy in a year or two, but what about the billions that are needed now for the health service? How would he ensure that the billions going into the health service over the next one, two or three years are funded? It is fine if he supports the Government's approach or our approach, but if he does not support either because he does not support a tax-funded NHS, he needs to say how the money would be found now. If he cannot, the implication is that there would be cuts to the health service in every constituency up and down the country. He has to have an alternative. [Interruption.] Conservative Members groan in their usual way, but they have to tell the people where the money would come from. Will the hon. Gentleman tell me where it would come from this year?

John Bercow: The problem from which the Liberal Democrats suffer is that they have been undergoing a process of intellectual retardation without interruption for some years. If the hon. Gentleman is in the business of offering to the Committee his prescription to remedy the ills of the health service before there has been a proper diagnosis of what those ills are, I can only say that it is extremely fortunate that he did not opt for a career as a general practitioner. At the moment, large sums of money that are allocated to the Department of Health are not spent. As a consequence, treatments that could be provided are not being provided. We will do our homework. If the hon. Gentleman thinks that it is sensible, 11 months after losing the last election on the last manifesto, to be expected to produce tonight the contents of the next, that only underlines why his party is the minority party and why it will remain so.

Edward Davey: If the hon. Gentleman continues to perform like that, I will continue speaking and provoke him even more because it will elucidate for the Committee more information, or lack of information, about the Conservatives' position. The Liberal Democrats are engaged in a major policy review of our public services. We have already produced a consultation paper, which went to our conference in Manchester.

Joe Benton: Order. The hon. Gentleman can continue his party competition outside the Chamber. I should like us to return to clause 26.

Edward Davey: I am grateful for that remonstration, Mr. Benton. I was just trying to help the hon. Member for Buckingham (Mr. Bercow), but of course I will return to the matter in hand. The Committee will be pleased to learn that I was just coming to a conclusion.
	The Government did not adopt our proposals for income tax increases instead of national insurance increases simply because of the little card that they had at the 1997 election. It is about grubby politics, and not about what is best, fairest and most efficient for this country, and I deeply regret that.

Dawn Primarolo: In advancing his views, the hon. Member for Kingston and Surbiton (Mr. Davey) often talks a good talk, but he does not always follow through. It is a regular claim of the Liberal Democrats that they thought of an idea first, but when looking at this Government's investment, particularly in the health service, we find that we have, at every point, invested more than the Liberal Democrats wanted, and more than would have been yielded by their 1p on income tax or any of their other little ruses.
	The hon. Gentleman says that he does not disagree with the Government that extra money is needed for the NHS, but he disagrees about the method of investment, and he focuses tonight on income tax rates. He says that he would have liked to table amendments to raise the 22p tax rate to 23p and to increase to 50 per cent. the tax on annual incomes of 100,000 or more. What is extraordinary is that he tabled an amendment, which was not selected, to put an extra 1p on the 22p rate, but he tabled no amendment on a 50 per cent. rate for incomes of 100,000 or more.
	The hon. Member for Epsom and Ewell (Chris Grayling), who intervened on the hon. Gentleman, made the point, which the hon. Gentleman did not seem to understand, that because of the freezing of allowances, pensioners on higher incomes will be contributing, but when we consider the distribution of income among the small number of pensioners who pay tax on their fixed income, we see that the vast majority would be hit by the 1p rise in the 22p rate which the hon. Gentleman advances.
	As we have said a number of times, the Government's view is that ever since Beveridge, the national insurance system has depended, rightly, on the principle that people contribute while in work for the benefits and services that they need when they cannot worka sound principle that is being continued by this Government.

Chris Grayling: I suspect that this point is symptomatic of the Liberal Democrats' ability to change their story according to circumstance, but is the Minister aware that the 1p on income tax to which she refers was, at the last general election, designed to be spent entirely on education? I am therefore slightly at a loss as to how the hon. Member for Kingston and Surbiton (Mr. Davey) relates that 1p to the health service tonight.

Dawn Primarolo: I am grateful for the hon. Gentleman's prompting. I was going to come to that point next, but I also wanted to make a point about savings. The hon. Member for Kingston and Surbiton talks about pensioners who have savings, but he makes no proposals in his speech or in any of the documents that the Liberal Democrats have produced to change the taxation rates on savings, which would be an issue for pensioners.
	The point made by the hon. Member for Epsom and Ewell is also very interesting. The Government have specifically said that the rise in the national insurance rate will directly contribute to extra spending in the five-year plan for the NHS. The Liberal Democrats have put together a package of amendments on tax, and they spend the money everywhere. They do not match the extra spending that the Government are giving to the NHS; nor do they match our spending on education. Those amendments are just convenient little soundbites in which the Liberal Democrats fail to do precisely what they have implored the Government to dobe direct about what tax is being raised and what it will be spent on.
	The Liberal Democrats then come up with the most extraordinary proposition. Income tax is an annual tax; it has to be renewed annually. Those who vote against this clause seek to prevent the Government from setting any rates for income tax, at a cost to the Exchequer of 102 billion this year and 117 billion next year. The hon. Gentleman needs to decide how he wishes to engage in this debate. My right hon. Friend the Financial Secretary said earlier that much of the Liberal Democrats' engagement in debates is not designed for a sensible discussion of the way forward; it is designed so that they can give the soundbites that will go into their Focus magazines to misrepresent the true choices facing the people of this country.
	The Government say that a comprehensive health service, free at the point of need, will be funded through the Beveridge principles. We also say that we need more investment in our public services, and with all the work that we have undertaken to build a stable economic framework for growth and for sustainable public services, what is required now is a freeze on allowances and the setting of the tax rates this year at 10p, 22p and 40p again, as we promised at the election.
	We said that we would use the tax credit system to help those in greatest need, to recognise the burdens and extra expenses of having children and to ensure that revenue is put aside for sustained investment, year on year, in the NHS to give us the first-class service that we need. It is about time that the Liberal Democrats stopped playing around with their 1p and faced up to the true magnitude of the investment in our public services that is necessary to make them first class. On that basis, I commend the clause to the Committee.

Edward Davey: That was a disappointing reply from the Paymaster General, who chose not to mention the fact that 60 per cent. of pensioners on low and modest incomes would not be hit by our proposals. She could have told the Committee that under parliamentary procedures it is impossible to table an amendment to increase the rate of income tax.

Dawn Primarolo: Perhaps the hon. Gentleman could explain why he tabled an amendment to increase 22p to 23p, even though it was not selected for debate.

Edward Davey: The amendment was included on the Order Paper so that people could be clear about our policy. Having taken advice from the Clerk, I knew when I tabled it that it was not selectable; I hope that that answers the Paymaster General's point. We want to get our policy on the record. Unfortunately, parliamentary procedures prevent some amending of expenditure and tax BillsI am very much against those procedureswhich means that one has to try to make one's point in other ways, which is what we did. The Paymaster General therefore does not have a strong case.
	The Paymaster General and the Financial Secretary share an antipathy to Focus newsletters, which have been effective in Brent and Bristol, where Liberal Democrats made net gains last Thursday[Interruption.]

Dawn Primarolo: What irritates us so much is the fact that, in many of our constituencies, Liberal Democrats campaign locally on not increasing taxes and cutting public services, but in Committee their representatives have the audacity to argue exactly the opposite.

Edward Davey: There are some areas where council taxan unfair tax supported by the Government and the Conservatives who introduced itis too high and hits pensioners. Our Liberal Democrat colleagues around the country are right to campaign both to replace council tax and to cut it. In the House, we have argued for increases in fair taxes that spread the burden of the cost of paying for public services, and we shall continue to do so. That proposal is now before the Committee, which should consider whether it supports increases in the health service budget funded by an inefficient, unfair mechanism or increases funded by a fair and efficient method. I advise Committee members not to support the clause, and urge them to join the Liberal Democrats in the lobby to vote for a fair and efficient way of raising money for our health service.

Question put, That the clause stand part of the Bill:
	The Committee divided: Ayes 452, Noes 53.

Question accordingly agreed to.
	Clause 26 ordered to stand part of the Bill.

Eric Forth: On a point of order, Mr. Benton. Presiding, as you are, in the Chair so superbly, you may well not yet have heard the rumour that has been circulating over the past couple of hours, and which has also reached the media, that it is possible that the Secretary of State for Transport, Local Government and the Regions may seek to make a statement later this evening. That would be a welcome development, were it to be true. You will appreciate the slight difficulty that that would appear to cause: as we are in Committee under your excellent guidance, could you advise the Committee what procedure might be available, were the Secretary of State to make his expected statement and therefore come to the House at last and be accountable for his actions over the past few months? Such guidance would be very helpful not only to the Committee, but perhaps even to the Secretary of State.

Joe Benton: As the right hon. Gentleman knows, the House is in Committee. It is therefore inappropriate for me, as Chairman of the Committee, to comment on any of the issues that he raises in his point of order. It is not for me to express an opinion as to what might happen after the Committee has finished. I say simply that I know nothing of the matter to which the right hon. Gentleman refers. I am here as Chairman of the Committee of the whole House considering the Finance Bill, and I cannot rule on the matter.

William Hague: Further to that point of order, Mr. Benton. Respecting your position as Chairman of the Committee considering the Finance Bill, but noting that you represent the authority of the Speaker in the House of Commons at this moment, may I ask you to relay two questions from me, and from other Members, to the Speaker?
	First, would it not accord with all precedent in the House for a Minister wishing to alter, withdraw or correct a previous substantive statement in the House to seek to do so in some way in the House? Is it not extraordinary, therefore, that the Secretary of State for Transport, Local Government and the Regions should do so in a statement made solely to the press, and then slink from the Chamber this afternoon while Members were pressing him to come here?
	Secondly

Joe Benton: Order. I think I have already ruled on this. I am happy to convey the right hon. Gentleman's wishes to Mr. Speaker, but I cannot do more than that, and I am sure that Mr. Speaker will have heard about this himself by now. I now propose to return to the Finance Bill. The Question is

Andrew MacKay: Further to that point of order, Mr. Benton. It was quite correct, I am sure, for you to point out that you are chairing a Committee of the whole House. You mentioned the possibility of the Secretary of State's coming here at 10 pm. There are suggestions in the Lobby and elsewhere that there will be a statement at 10 pm, but, as you know, in Committee the debate on the Finance Bill can continue until any hour. Is there a facility that allows the Secretary of State to come here at 10 pm in those circumstances?

Joe Benton: I made no reference to time, or to a statement. If and when a statement is appropriate, the right hon. Gentleman will know in due course.
	I do not propose to take any more points of order on this matter. I ask Members to leave the Chamber quickly and quietly.

Clause 27
	  
	Indexed rate bands for 200203: PAYE deductions etc

Question proposed, That the clause stand part of the Bill.

Howard Flight: Clause 27 postpones the normal date for the implementation through PAYE of revised indexation of personal reliefs17 Mayto 17 June.
	First, I want to know the reason for the delay. We realise that the Finance Bill was presented rather later this year, but the basic indexation data must surely have been available to the Inland Revenue in the expectation of its normal implementation. Secondly, I want to be absolutely sure that the month's delay will sort itself out over the year, and that citizens can expect the normal 12 months in relation to the new indexation. I assume that that is the case, but clause 27 does not make it entirely clear.

Dawn Primarolo: The period for notification following the announcements in the Budget, and hence the necessary delay, are to allow all the tables and other material to be printed and collated, and properly checked, and to enable instructions to be issued to the 1.3 million employers involved. That is obviously necessary.
	There is also provision for a CD-ROM version of the guidance and the tax tables, in accordance with the Carter recommendations. Employers will be given a pack, which we hope will encourage them to let computers do more of the work for them, that work being the administration of PAYE.
	The delay, then, is simply a consequence of the later Budget. It is also intended to ensure that information given to employers is accurate, is in a form usable by them, and gives them enough time to forward the instructions. That will be the only consequence of the change.
	Question put and agreed to.
	Clause 27 ordered to stand part of the Bill.

Clause 28
	  
	Personal allowance for 200304 for those aged under 65

Question proposed, That the clause stand part of the Bill.

Howard Flight: Clause 28 effectively abandons the 1977 Rooker-Wise amendment in relation to the indexation of personal allowances for 2003-04.
	The freeze in both the national insurance primary threshold and personal allowances will raise 700 million in 200304 and 850 million in 200405. May I ask the Paymaster General whether there is any proposal to freeze the amounts for 200405 as well? That would raise an extra 1.6 billion in that year.
	Our objections are based partly on principle, and partly on the fact that approximately 1 million more people960,000, I thinkwill be paying top-rate tax. That is an increase of some 50 per cent., which will hit policemen, nurses and teachers particularly hard and, inevitably, is likely to drive up pay demands in the public sector. Moreover, although the official figures show an increase in the tax take between 199697 and 200607 of 35.3 to 38.3 per cent., there will be an increase of 5 per cent. if we take into consideration the accounting changes made since 1995.
	I think we have made it abundantly clear that, while we accept the need for additional spending on health care, we oppose the raising of tax without a package of reforms that will deliver improved health care and ensure that the extra money is used effectively rather than simply resulting in extra costs. Only about 60 per cent. of the money raised through tax increases will be spent on health; 40 per cent. will go on tax credits, if we allow for the accounting fiddles in that regard.

Tom Harris: The hon. Gentleman says he opposes tax increases specifically to fund the health service unless reforms are made, yet his party and its Front Benchers have refused to specify the reforms that they want. Is it not the case that they are simply opposed to extra investment in the NHS, full stop?

Howard Flight: No, that is not the case. In all sincerity, hon. Members other than me have made the point many times. It involves an issue of principle. While we have a Soviet-style system of delivering health care, while hospitals do not have adequate independence to run their affairs properly and while only some 17 per cent. of expenditure is getting to the front line and there are more administrators than hospital bedsthe statistics show clearly that that is the case in Scotland and Walesmerely increasing expenditure will not result in improved delivery.

Mark Hendrick: Will the hon. Gentleman give way?

Howard Flight: Not for a second.
	Our proposition is extremely simple: until we have in place a programme of adequate reforms that will do its best to ensure that extra expenditure delivers better health care, expenditure will risk being wasted. We have made the position clear many timesin essence, it is the reason why we are opposed to this little stealth tax of freezing personal allowances. Furthermore, the particular group that the measure hits is one that the Government are ill-advised to hit and, as I implied, the additional revenue that will be raised is likely fairly substantially to be swallowed up by additional pay demands.

Lynne Jones: Although I am certainly in favour of the Government increasing taxation so that they can invest more in the health service, I am very unhappy with the clause, which freezes the personal allowance.
	I believe that far too many poor people are paying tax. Rather than freezing the personal allowance, the Government should be increasing it in order to take people out of tax. Some 69 per cent. of people on a third of median male earnings are paying tax. That is nonsensical; many people are paying tax and then having to rely not on tax credits, but on existing means-tested benefits.
	That arrangement is unnecessarily complex. We need reform of the tax system substantially to raise the personal allowance and to reform tax rates so that they are simple. We need to raise the threshold at which middle income earners pay the higher rate of tax. We also probably need a rate of about 30 per cent. in the middle to compensate for the reduced tax that would result from a substantially higher tax allowance. I also believe that there should be a higher rate of tax than the current 40 per cent. and that such taxation should strike high earners, not moderate ones.
	Such reforms are not on offer, but in the meantime, I will not support the clause or the abolition of the changes that took effect following the introduction of the Rooker-Wise amendment.

Michael Jack: I am pleased to have the opportunity to speak in this interesting debate.
	The hon. Member for Birmingham, Selly Oak (Lynne Jones), who I know takes a particular interest in tax matters, made a point that is central to this debate: in justifying the proposal, the Government have not declared any strategy about the number of people who should pay tax. Effectively, the measure has an impact on those who will remain at the basic rate or the 10p starting ratepoints that I shall develop in a moment.
	As the Paymaster General will recall, on page 75 of the Red Book, at paragraph 4.56, the Government have included a passage entitled Making work pay for all:
	The Government has introduced a series of reforms to help make work pay at all levels of the labour market, but especially for those on low incomes.
	In justifying that position, the Government pray in aid their 22p basic rate of income tax. I was delighted to read that that is the lowest rate for 70 years and to see that the Government are moving towards a basic rate of 20p in the pound, which was a Conservative policy. The paragraph also comments on the 10p starting rate.
	If the Government are so proudat paragraph 4.56 of the Red Bookof saying that they want to make work pay for all, why did they choose the method set out in the clause to raise revenue? People whose personal allowance is part of a gate-keeping exercise as to whether work pays will find that work pays less than it would have done if the allowances had been indexed. The policy seems to fly in the face of the Government's chosen course of action of making work pay.
	As the hon. Member for Birmingham, Selly Oak indicated in her very perceptive remarks, the clause is about the number of people who are brought into the tax system and have to pay tax. I am intrigued to know why, even though only a small amount may be involved, the Government seem to have no regard to the fact that they are bringing into tax a few more people than would otherwise have been included.
	While I considered the implications of the measure, I discovered one or two interesting things on which the Paymaster General might like to comment. Looking back to 199192, we find that the number of basic rate taxpayers as a proportion of the labour force was 91 per cent. By 199697, that level had fallen to 61 per cent., but under the current Government, it has risen to 74 per cent. We are finding that more basic rate taxpayers are in the tax system than were under the previous Conservative Government. If the number of basic rate taxpayers as a percentage of the labour force is rising, one way of avoiding that process would have been to index the allowances and seek other ways of raising the revenue.

Mark Hendrick: Are not more people working now than ever before? As there are so few unemployed people now by comparison with 1990 and 1991, is it not probably a desirable consequence that more people are paying tax?

Michael Jack: If the hon. Gentleman had listened, he would have heard me use a proportionate measure rather than an absolute one. If I had used an absolute measure, his line of argument would have been entirely correct, but I was aware that if I were to fall into that trap, an argument would be advanced to destroy the point that I am making. With respect to his analysis, he is wrong. I welcome the fact that there are more people in the labour force, which always has a beneficial effect on the tax take, but that is why I used a proportionate measure.
	It is interesting to consider the number of basic rate taxpayers as a percentage of all taxpayers. That proportion was 94 per cent. in 1991 and 63 per cent. in 1996, and it went back up to 76 per cent. in 200102. The Government seem to have ignored that rise in the number of basic rate taxpayers, for whom the indexation of allowances at the margin is very important. They must do rather better than simply announcing the stark fact that the measure will happen, which is what the Red Book says; it effectively states merely that personal allowance rates will remain the same. No doubt the Paymaster General will try to justify the measure on the basis that it will raise an extra 700 million in 200304 and an extra 850 million in 200405, to help the Government's efforts to raise revenue for the health service.
	There are, however, other ways in which the Paymaster General could raise substantially more, especially in relation to her responsibility for the indirect tax system. She could do so if she got to grips with the billions of pounds that seem to be disappearing out of the VAT system, as witness the recent report by the National Audit Office. The Government will no doubt respond that they have invested more resources at our ports to deal with smuggling, and that the Bill contains measures to tighten up on VAT, just as previous Finance Bills have done. But even with all that tightening up, it is calculated that over 7 billion is going missing. The question I would like to know the answer to is: what will the investment return be if the Government put in yet more resources? If they will get 7 billion, they can afford to spend 1 billion or 2 billion.
	When we were in power, we were challenged about our spend to save initiative, but the principle remains. As the Paymaster General will know, over the years the application of more qualified senior inspectors at the Inland Revenue to some of the more difficult and complex areas of tax, particularly those involving large companies, has yielded considerable amounts of extra taxwell within the scope of this measure. If the Government are going to break faith with the low paid by not indexing their allowances, they have to explain to them why a relatively modest investment in extra facilities to bring in indirect taxes could not surpass by a large measure the amount of money that this proposal seeks to save. If the Government wish to remain true to their cause of making work pay, they have to do quite a lot of explaining of why they are asking the Committee to agree with a proposal that goes fundamentally against that chosen course of action.

Chris Grayling: The measure completely confuses me. I cannot for the life of me understand why a Labour Government are pursuing a policy that will clearly damage people on low incomes.
	Let me tell the Paymaster General a story about a lady who came to my constituency surgery a couple of weeks ago. She was very confused about her tax affairs. She said, I do not understand. I seem to be paying tax and I do not have much of a pension. I received bereavement allowance, which I have now lost, and I am paying 200 a year in tax. I have a low income, and 200 a year is lot of money to me.
	We looked through that lady's papers. I am not a qualified tax expert but at first glance it looked as if her tax affairs were correct. Her income was just high enough to pay 200 year in taxation. However, I appreciated why she felt frustrated trying to make do on a low income in an environment where many other costs, such as council tax, are rising sharply. Gas prices have recently jumped upwards. I could understand why she felt under pressure financially.
	Why on earth, then, have the Government introduced a measure that will put that lady's tax bill up? Freezing the personal allowance will mean that she will pay tax this year or next year that she would not otherwise have to pay.

Roger Casale: I wonder whether the hon. Gentleman has left out part of the story. Perhaps he would tell the Committee whether, when the pensioner came to see him, he informed her about the pension tax credit, which raises the income of people on modest incomes. I hope that he took the opportunity to point out that valuable benefit to her.

Chris Grayling: That may well be so. Indeed, for that lady's sake, I hope that she does manage to get back some of the money that she is paying in extra taxes; but she will have to get to grips with an extremely complex application process of forms and difficult bureaucracy in order to get back some of the money that the Government are taking away.

Dawn Primarolo: rose

Chris Grayling: Perhaps the Paymaster General can tell me the logic of taking money away and giving it back again.

Dawn Primarolo: To help the hon. Gentleman out, we are discussing clause 28, which freezes the allowances. Clause 29 increases the personal allowances for pensioners. Pensioners are not included in clause 28.

Chris Grayling: Perhaps the Paymaster General can clarify the matter. My understanding is that the significantly increased amount is for those aged 75 and over. However, even if she is correct, let us look at the gamut of people on low incomes: a student nurse starting her first job, someone earning 4 or 5 an hour in McDonald's, a new graduate in their first job earning a relatively low salary, or someone who has left school and is following an apprenticeship. Freezing the personal allowance this year will increase the tax burden on those people, which should never happen. It is a tax on the low paid and on low incomes. As my right hon. Friend the Member for Fylde (Mr. Jack) has said, it will do nothing to help to get people into work; it will create a disincentive to work. It will create a burden on those who can least afford it.

Mark Hendrick: On the concern about the low paid, why did the hon. Gentleman's party oppose the minimum wage and say that it would cost 1 million jobs, when in fact we have created 1 million jobs?

Chris Grayling: I remind the hon. Gentleman that during the years we were in government, year by year, Conservative Chancellors made a virtue of increasing the personal allowance, often above the level of indexation that was required, and of taking people out of taxation. As my right hon. Friend the Member for Fylde has pointed out, that tide is being reversed. More and more people are being caught by basic rate tax than were before.

Michael Jack: Does my hon. Friend accept that, with their work in the field of family credit, the previous Conservative Government showed their regard for those who were in work but on low wages, and it is a tribute to that that the credit has now formed the basis of the various working families and successor tax credits that the Government have adopted?

Chris Grayling: I thank my right hon. Friend for those comments. He highlights a fair example of good Conservative practice being adopted by a Labour Government, but none of that explains why this Government have chosen to target a tax change on the lowest earners in societyon people with genuinely low incomes who have difficulty making ends meet. It makes no sense.

Howard Flight: May I make the point that a father on pay of about 13,000 will pay some 2,500 in tax and get back some 2,700 in child tax credit? What on earth is the point of that?

Chris Grayling: My hon. Friend raises an important point. Too much of what the Budget does involves taking with one hand, giving back with another and creating bureaucracy in the middle, which must ultimately cost money and reduce the amount available for spending on other services, or increase the amount that people have to contribute in taxation.
	This measure represents an unwelcome extra burden on the low paid. It is a second tax burden on public servants and other people who are not in particularly highly paid jobs and who will pay extra as a result of the national insurance increases. As a result of the Budget, a student teacher on 14,000 or 15,000 a year, a student nurse on the same salary, a new policeman and a new doctor will face an additional tax burden of many hundreds of pounds a year. This measure will simply increase the burden on them. It will erode a part of our tax system, the indexation process, that has been there for a generation.

Michael Jack: Does my hon. Friend find it odd that the present hon. Member for Preston (Mr. Hendrick) is opposing the actions of the previous hon. Member for Preston, the co-proposer of the Rooker-Wise amendment?

Chris Grayling: I thank my right hon. Friend for that interesting piece of history. It is certainly food for thought for the hon. Gentleman.
	I commend the honesty and commitment of the hon. Member for Birmingham, Selly Oak (Lynne Jones), who has rightly pointed out that this is an attack on people who should not be placed in that position. Her concerns are shared by Conservative Members. On this issue, I will certainly join her in the Lobby.

Tom Harris: I did not intend to take part so early in the debate, but there is nothing like Conservative crocodile tears to stir me to righteous indignation. The hon. Member for Epsom and Ewell (Chris Grayling) said that the clause represents a break with the low paid. I have no idea whether he was on the Government Benches before 1997, but it does not sit well with any Conservative Member to uphold the rights of the low paid, when the Conservative party not only opposed the national minimum wage but opposed the 10p starting rate that this Government introduced in 1997. I believe that it still opposes the working families tax credit, which is aimed specifically at some of the poorest in our society. It opposed the minimum income guarantee for pensioners, and it will doubtless oppose the pension credit.

Michael Jack: I wonder whether the hon. Gentleman might help me to understand the logic of his argument. Why does he prefer to help the low paid through the 10p starting rate, rather than using such resources to increase personal allowances? Under the latter method, such people would not have to pay tax at all.

Tom Harris: I am happy to discuss that later.

David Laws: Will the hon. Gentleman give way?

Tom Harris: If the hon. Gentleman does not mind, I shall continue for a while.
	In a perfect world, we could raise thresholds yearly by inflation plus 10 per cent., but the fact that underpins this Budget is that the national health service was consistently underfunded for 18 years by the Conservative Government. We have taken a principled decision to raise tax in order to put into the NHS the extra money that is needed. Had the previous Conservative Government decided to freeze the thresholds, the consequences would have been far more serious. In an economy with inflation running at 10 or 15 per cent., such action would have constituted a far greater setback to the lowest paid, and to everybody else. Not only did the previous Conservative Government oppose the national minimum wage; they abolished wages councils as well.
	The hon. Member for Epsom and Ewell spoke touchingly and with tears in his eyes about nurses being devastated by the freezing of allowances. He also said that, under the clause, any hope of a career for school leavers will disappear over the horizon. However, it is precisely nurses who will benefit from the Budget's general package. Thanks to this Government's handling of the economy, school leavers have been given hope of finding a job. They can find a job even in the health service.

Chris Grayling: The hon. Gentleman may not be aware of the practical consequences of tax increases for public servants in my area. It is proving increasingly difficult to recruit new teachers and health service workers, and one disincentive is the cost of living in the south-east. The more cost burdens that are addedbe they increased council tax, higher national insurance contributions or adverse changes to personal allowancesthe less incentive such people have to remain in public services. That is the real consequence of higher taxes.

Tom Harris: I agree with what the hon. Gentleman says about living in the south-east, but I should point out that it is far cheaper to live there today than it was 10 years ago, simply because interest rates are a third of what they were under the previous Conservative Government. The morale of health service workers is better today than it was at any point under the Conservatives, and it is likely to improve greatly in the next 10 years, as investment in the NHS comes through.

Adam Price: The hon. Gentleman is making a brave attempt at defending the indefensible, but will he address the central point that was made by the hon. Member for Birmingham, Selly Oak (Lynne Jones)? Freezing the allowance is an extremely regressive form of taxation that will disproportionately hit the poorest paid in our society.

Tom Harris: I disagree. I have already mentioned several Government initiatives that will ensure that the lowest paid in our society have the best protection, even under the new regime that the clause will introduce.
	In accusing the Government of attacking the lowest paid, the hon. Member for Epsom and Ewell mentioned one of his constituents. I should tell him that, before the national minimum wage was introduced, some people were being paid 1.40 an hour. To such people, it makes no difference whether thresholds have been frozen since time immemorial. They were being paid so little that work could not possibly pay. Thanks to the measures introduced by this Government, the lowest paid will continue to reap the benefits of a redistributive Budget, which are far more significant than anything that the Conservative party could have offered when in government.

Mark Hoban: Is the hon. Gentleman aware of the view of Andrew Dilnot, director of the Institute for Fiscal Studies, that the most effective way to relieve poverty is to lift people out of the tax bracket by increasing personal allowances, rather than mucking about by introducing measures such as a 10p rate?

Tom Harris: The short answer is no, but the longer answer is that the IFS has also said that, even according to the lowest estimate, through positive economic and financial policy this Government have taken more children out of poverty than have any other Government.

Howard Flight: Why does the hon. Gentleman describe the Budget as redistributive, given that the Prime Minister said on Breakfast With Frost that it is not?

Tom Harris: The hon. Gentleman may be surprised to learn that I am not a spokesman for the Prime Minister. I am not an economist, but I can call a spade a spade, and I can tell that this Budget, like all its predecessors since 1997, is redistributive. That is why I support it, and why I will vote for the clause.

Mark Hendrick: Does my hon. Friend agree that, in opposing the Government's proposed increases, and by talking about a Soviet-style system, the Opposition give the game away? They do not believe in state support for the health service, and the real reform agenda that they do not mention is a privatisation programme that dare not speak its name.

Tom Harris: The Conservatives cannot challenge my hon. Friend's comments, because they have refused to explain their plans for the NHS. That makes me extremely suspicious

Joe Benton: Order. I ask the hon. Gentleman to come back to the clause.

Tom Harris: Thank you, Mr. Benton.
	The clause is necessary. It will not harm the lowest paid in our society, and certainly not as much as it could have under previous policies. I am delighted to commend it to the Committee, and I shall cut my losses there.

Mark Hoban: It is a pleasure to follow the hon. Member for Glasgow, Cathcart (Mr. Harris). It enables me to address some of his comments about how the money will be spentan issue to which I shall return in a moment.
	It is right to note that the number of higher rate taxpayers has increased by 50 per cent. since this Government took office, and like my hon. Friend the Member for Epsom and Ewell (Chris Grayling) I have spoken to constituents who are concerned about that. One constituent who wrote to me recently was horrified to discover that her husband had just breached the 40 per cent. threshold. She felt that his was not the sort of job that one would expect to incur tax at a 40 per cent. rate. Her point was that incomes that are low in the context of the area that I represent are getting caught in the 40 per cent. tax bracket. Of course, the freezing of personal allowances next year will exacerbate the problem. People who get reasonably small pay increases may well cross from the basic rate tax bracket to the higher one, and from the 10p starting rate to the higher rate.
	The drift of people towards higher tax rates is a consequence of the freezing of the personal allowancea point that all hon. Members should take on board. It impacts on incentives to work. It impacts on whether people can leave low-paid jobs to improve themselves and meet their aspirations for themselves and their families.
	We need to be careful when we explain to those constituents who will slip into the higher rate tax bans exactly why personal allowances will be frozen in 200304. The hon. Member for Glasgow, Cathcart said that the money will go to save the NHS. I remember that in last week's debate on the national insurance paving motion he said that the money would be allocated to saving the NHS. If he had read the Red Book, he might have discovered that in fact the surplus on the Budget will increase over the 200304 financial year, as a consequence of the actions taken by the Government in the Budget. That is shown in table 2.4 and I am glad to see that the hon. Gentleman has his copy in front of him.
	Table 2.4 states that the surplus on the previous Budget was 4 billion. In the current Budget, that surplus will increase to 7 billionan increase of 3 billion. The cost to taxpayers of the freezing of personal allowances in 200304 will be 0.7 billion, so we will penalise the low paid and all those who will slip into a higher rate tax bracket simply to expand the Government's surplus. The money will be spent not on saving the NHS but on increasing the surplus that will be available for the Chancellor to release in later years. There is no apparent reason why personal allowances should be frozen for that financial year and it is difficult, therefore, for the hon. Gentleman to claim that it is being done to save the NHS. That argument is not reasonable.
	The Chancellor will hit the very peoplethe low paidhe has set out to help in so many of his Budgets, simply to increase the surplus. If personal allowances are frozen, lower paid people who receive pay increases may start to pay the starting rate of tax or the basic rate of tax. It is a retrograde step. No party has a monopoly on compassion and Labour Members should consider the impact of an unnecessary tax increase of 0.7 billion on the very people they seek to help.

Roger Casale: The hon. Gentleman said that he was trying to explain the measure to one of his constituents, but he should explain to the Committee how he can speak on behalf of low paid people who will, he says, be adversely affected, and at the same time speak for a party that did nothing in government to help poor and vulnerable people. In fact, the Conservatives pushed millions of people and families into poverty. In opposition, his party has opposed every measure that the Government have taken to redress that wrong.

Mark Hoban: I am staggered, because to my recollection the Conservatives did not oppose measures such as the Tax Credits Bill. In government, we took stepsas my right hon. Friend the Member for Fylde (Mr. Jack) outlined earlierto alleviate poverty. We are now considering the record of this Government and the impact that this measure will have on the lower paid.
	The freezing of tax allowances will also have an impact on the people whom the Budget did not help. Many childless couples and single people will have lost out through the 1 per cent. increase in NI contributions, and many of them are on relatively low incomes. The uprating of the personal allowances would have mitigated some of the impact of that tax increase. Those people will not benefit from the tax credits that the Government have introduced and they will be hit twiceby the increase in NI contributions and by the freezing of personal allowances. The Government are making a double dip into the pockets of childless couples and single people. Given that this tax increase is not necessary to fund public spending increases in 200304 and in subsequent years, the Government should take this opportunity to protect the interests of those who will suffer from this measure. The Government should recognise that there is more than one way to help those who are most in need.

David Laws: I considered not taking part in the debate, but so enlivening has it been that I cannot resist the opportunity. We have heard several contrasting contributions from Conservative Members. We started with the hon. Member for Epsom and Ewell (Chris Grayling), who expressed his concern about the effect of the change on people on very low pay, and then we ended with the hon. Member for Fareham (Mr. Hoban), who expressed his concerns about higher rate taxpayers.

Mark Hoban: I wish to correct the impression that the hon. Gentleman is giving to the Committee and to casual readers of the daily

Roger Casale: The Daily Mail.

Mark Hoban: No, but I nearly said the Daily Record, which is a completely different newspaper. I meant to say the daily Hansard report. I did not speak only about higher rate taxpayers. In fact, I devoted much of my remarks to the impact on lower rate taxpayers.

David Laws: Those who read the hon. Gentleman's comments in Hansard tomorrow will see the slightly different emphasis that he placed on the matter compared with the hon. Member for Epsom and Ewell. We do not need to look to the future to judge the Conservatives' priorities, because we have their record in government over a long time when they placed the reduction of the basic rate of income tax and, to some extentthey will be pleased to hear me say thisthe upper rate of income tax as a priority over raising the personal income tax threshold or introducing a lower rate of tax such as the 10p rate. That is on the record in their Budgets and in the memoirs of Lord Lawson, who specifically deals with that issue and states his preference for reducing the basic rate of taxa less progressive measureas opposed to increasing the personal tax allowance.

Howard Flight: Is it a good thing that another 1 million people, or 50 per cent. more, have been brought into the higher tax band? That band will now include people such as teachers and doctors.

David Laws: I am delighted that the hon. Gentleman has raised that point, because he will know that raising the personal tax allowance, as opposed to cutting the basic rate of tax or introducing a 10p tax rate, has been the policy of my party. I sought to contrast the present views of the Conservatives on freezing the tax threshold with the views that they held in office. Perhaps the hon. Gentleman will tell usif the Conservatives have a tax strategy at the momentwhether they would still focus on reducing the basic rate of tax or on the more progressive measure of increasing the personal tax allowance.

Chris Grayling: The hon. Gentleman is devoting most of his remarks to the history of the Conservative party in government. I remind him that the Conservatives maintained indexation and, indeed, on several occasions increased the thresholds by more than the rate of inflation. Today we are talking about a Labour Government who have abandoned indexation and I suggest that he devotes his remarks to that topic.

David Laws: I am grateful to the hon. Gentleman, but I did not want to mention the occasions when the Conservative Government froze the level of the personal income tax allowancesomething that he has criticised this evening. I do not want to be drawn even further into the quandary that is Conservative policy on taxation and the health service, solest hon. Members feel that I am not being equitable in my criticismsI shall move on to discuss the Government's position with regard to the personal income tax allowance.
	The Government should take no pride at all from freezing the personal income tax allowance. As has been stated, that is a less progressive reform of the tax system than the 10p rate that the Government introduced. The hon. Member for Glasgow, Cathcart (Mr. Harris) said earlier that many people are on such low incomes that they do not pay a significant amount of income tax and that therefore they have been influenced more by the minimum wage and tax credits. That is true, but the Government's reforms of the personal tax systemin the past few years they have reduced the basic rate and introduced a 10p ratecontrast with the proposal to freeze the personal allowance, which is clearly regressive rather than progressive.
	Why has the change been introduced in this Budget? It has not been introduced primarily to bolster the Government's surpluses, as the Government are projecting significant borrowing on their Budget accounts, on the old Conservative basis. I believe that the Government chose to freeze personal income tax allowances because they had made a commitment in two general election campaigns not to change the basic rate of tax. As a consequence, they had to find other ways to increase the tax burden.
	As I have said, the freeze on personal income tax allowance is regressive, and the rise in employers' national insurance contributions will hit jobs. The changes are also unfair, as the Government have also increased employee national insurance contributions. That is a tax on jobs from which many wealthy people are exempt as, although they could afford to pay more tax, they may not be in work.
	For all those reasons, my party opposes freezing the personal tax allowance.

Mark Field: Mr. Gale, you have missed an enthralling debate on this matter over the past three quarters of an hour. However, I shall not detain the Committee for long.
	Most of the important points on this matter have been made by those of my hon. Friends who have contributed to the debate. The hon. Member for Birmingham, Selly Oak (Lynne Jones) also made a helpful contribution. The hon. Member for Glasgow, Cathcart (Mr. Harris) is not present at the moment, but his contribution was also helpful, albeit rather more inadvertently.
	Many people are worried that the proposal is too complicated. As has been noted by hon. Members of all parties, some people earning relatively small sums of money will find that they have to pay extra tax. I accept the point made by the hon. Member for Preston (Mr. Hendrick) that the tax credits scheme comes into play in this regard. People earning modest sumssay between 12,000 and 14,000 a yearwill end up paying a large proportion2,000 or morein tax, but they will get more than that amount in tax credits.
	It is nonsensical to have so complicated a system. We need to be more honest in our approach to taxation, and the Chancellor's plans for tax credits are based on the fact that they do not count as public expenditure because of how they are implemented. That also muddies the waters of public spending.
	I agree too with the hon. Member for Yeovil (Mr. Laws), who said that the complication introduced into the system over the past two or three Budgets results from the Government's pledge not to increase the headline rates of income tax at the basic and higher rates. However, although the strict letter of that pledge has been kept, one consequence of not increasing the allowances even to take account of inflationthey are not going to be indexed in any wayis that, in effect, tax rates will be increased.
	As my hon. Friend the Member for Arundel and South Downs (Mr. Flight) pointed out, one effect of the Government's tax policy over the past five years is that the number of people paying the highest rate of 40 per cent. has risen from about 2 million to about 3 million. To that extent, the spirit of the 1997 pledge not to increase taxes has been broken, if not the letter.

Mark Hoban: My hon. Friend represents a London constituency. As salaries rise to keep pace with living costs, will not more and more people in London fall into the 40 per cent. band?

Mark Field: My hon. Friend is right. I do not want to indulge in special pleading, but that is a problem facing all hon. Members with London constituencies. The electorate of the hon. Member for Wimbledon (Roger Casale) is probably even more middle class than mine in Cities of London and Westminster. Hon. Members with seats in London and the south-east increasingly find that people in those constituencies on incomes that are comparatively modest find themselves in the upper tax rate band.
	That is a real problem. My hon. Friend the Member for Epsom and Ewell (Chris Grayling) spoke earlier about how it affects people working in the public services. Nowadays, it is very difficult to attract people into the public servicesor even into relatively low-paid jobs in private hospitals or private schools, or in shopswithout paying some sort of London weighting. That could be the public sector London weighting, or a private sector weighting. All too often, people facing the very high costs of housing and of living in London and the south-east find themselves heading inadvertently for the upper tax rate.
	I am sorry that the hon. Member for Glasgow, Cathcart is not present, as I thought that his comments about the NHSabout which he talked at great lengthwere a little rich. To a large extent, health matters as they affect his constituents are out of his hands, given the role of the Scottish Parliament. The pro rata tax expenditure on health in Scotland and Wales is much greater than it is in England, and it is ironic that there should be so little satisfaction about that. This is supposed to be a Budget for the NHS, but the Government must give close consideration to the question of how effectively the money may be spent.

Mark Hoban: I should hate my hon. Friend to sit down without saying more about tax credits and low pay. Every low-paid person will be affected by the tax increases that will flow from the freezing of personal allowances. However, does my hon. Friend agree that an unusual aspect of the proposal is that not everyone will benefit from the system of tax credits? The take-up rate for tax credits is something like two thirds of all those who are eligible. Many people will therefore lose out as a result of the provisions in the Bill. Does my hon. Friend agree that they will not catch up through the tax credit system, as it is quite complicated?

Mark Field: My hon. Friend makes an interesting point, and I shall be interested in what the Minister has to say in response. My hon. Friend is a former chartered accountant, and therefore a greater expert than I on these matters. I am afraid that I am one of those hon. Members who used to belong to the legal fraternity, but my hon. Friend can crunch the figures.

Paul Boateng: The hon. Gentleman does not have to apologise.

Mark Field: The Financial Secretary is another former member of the legal profession. I served only as a solicitor, but I understand that the right hon. Gentleman was a barrister.

Mark Hoban: He was a distinguished barrister.

Mark Field: He was a distinguished barrister, so perhaps I should refer to the Financial Secretary as the right hon. and learned Member for Brent, Southbut perhaps not.

Roger Casale: I am grateful that the hon. Member for Cities of London and Westminster (Mr. Field) has not tried to build his remarks on the crocodile tears of a Conservative defence of the low paid. The hon. Gentleman is basing his argument on the complexity of the tax system, and he has raised some interesting points. He is opposed to freezing the thresholds, but what would he propose instead? If he were to develop his argument further, I am sure that we would find him proposing something even more complex than what is contained in the Bill.

Mark Field: That is a fair comment, and I thank the hon. Gentleman for complimenting me on touching on the question of complexity. I feel strongly that there should be indexation. The system has become increasingly complicated but, as my hon. Friend the Member for Fareham (Mr. Hoban) pointed out, roughly one third of those who qualify for tax credits do not claim them. There is a real risk that a significant number of people who pay tax by PAYEthey often do not realise just how much they are paying, as the money is taken straight out of their pay packetswill not claim the tax credits for which they qualify. I hope that the Minister will say something about that.
	One thing that the Government can do is increase advertising to ensure that people are aware of the benefits to which they are entitled. Many elderly people, in particular, are unaware of the credits as they may not have been part of the work force for some time. None the less, this seems to be an idiotic system. If we had a blank sheet of paper before us, we surely would not design an income tax system in which millions of people on low incomes pay tax and can then claim even more than that in various credits.

Dawn Primarolo: I have been a little startled at some of the assertions made by Conservative Members, but it has nevertheless been extremely refreshing to hear how deeply concerned some of them are about the plight of those on low incomes, families trapped in poverty and the crucial issue of ensuring that people are aware of their entitlements and rights. However, I was particularly startled by the speech of the hon. Member for Cities of London and Westminster (Mr. Field) when I recall that social security legislation under the Conservative party, when in government, meant that there was no obligation on the Department of Social Security to notify people of their rights. Instead, they had to guess them. Therefore, it will be of enormous benefit if all Members of all the political parties in the House can agree that eradicating child poverty from our society is a principle to which every Member is committed, even if we disagree on the methods of doing so.
	Whenever I have challenged Conservative Members, outside the Chamber, to make such a commitment, they have declined to do so.

Mark Field: Will the Minister give way?

Dawn Primarolo: I am more than happy to give way if the hon. Gentleman will put on record his pledge to see the scourge of child poverty eradicated from our society, even though his party doubled the number of children living in poverty.

Mark Field: Everyone on both sides of the Committee is in favour of eradicating child poverty, but one difficulty with child poverty is definitional. In the pastcertainly prior to 1 May 1997I recall that Labour Members were keen to ensure that statistics were bandied around when child poverty was seen as a relative value. Obviously, with many families becoming more affluent, relative values are almost meaningless. If there is an absolute rather than a relative value, I will be only too happy to join the Minister in her crusade to end child poverty.

Dawn Primarolo: I will not go down that road, Mr. Gale, because I am sure that you would rule me out of order, except to say that what the hon. Gentleman says is a load of rubbish. He does not want to acknowledge the rising level of incomes in our society and the fairer distribution and share of the growing wealth that has taken place since the Government were first elected.
	I have no problem in discussing elsewhere with the hon. Gentleman definitions of poverty. When parents cannot afford to buy their children a new pair of shoes because they do not have enough money, that is a pretty good indication. However, I welcome the hon. Gentleman's unequivocal pledge that he is prepared to join a campaign to eradicate child poverty, and I hope that his colleagues will join him.

Michael Jack: Will the Minister give way?

Dawn Primarolo: I hope that the right hon. Member for Fylde (Mr. Jack) is about to make the same commitment.

Michael Jack: I wanted to pick the hon. Lady up on her point about the distributional effects of the Government's tax policies. As an exercise in the clarity and transparency of the Government's policies and to enable us to understand some of the things to which she has referred, will she commit to answering again the question first tabled in 1981 by the then hon. Member for Blackburn (Mr. Straw), now Secretary of State for Foreign and Commonwealth Affairs, on taxdirect and indirectso that we might gauge the effect of the measures through the deciles of income that used to be at the centre of that question, or will she explain once and for all why she will not answer it?

Dawn Primarolo: As the right hon. Gentleman knows, because this has been debated in the House many times, the distribution of indirect tax is imprecise and difficult to measure. Are we to assume that every household smokes or consumes a certain amount of beer, whether from a small brewery or not?

David Laws: Will the Paymaster General give way?

Dawn Primarolo: I will be happy to give way to the hon. Gentleman, but I should like to finish one point before giving way on the next.
	In advancing the 10p tax rate, reducing the basic rate of tax and designing our tax measures, whether they be tax credits or changes to the tax system, to ensure that maximum benefit goes to those on the lowest incomes, the Government have substantially increased those incomes. When I have given way to the hon. Gentleman, I will give some examples of how significantly incomes have been increased.

David Laws: On the non-continuance of the previous series of figures on the tax burden, although I heard the Paymaster General's criticisms of the previous methodology of deriving the tax burden, does she recall using precisely the same figures, to great effect, in opposition?

Dawn Primarolo: I admit that I remember being in opposition, but it has no glowing attraction. I much prefer being in government and taking decisions. I will give the hon. Gentleman some figures to consider.
	A single person aged 25 or over, working 35 hours a week on the national minimum wagewhich was opposed by both the Conservative and Liberal Democrat partieswill be 21.55 a week better off as a result of the working families tax credit. A single-earner family on half male mean earnings, with two children, will be 3,490 better off since 1997.

Lynne Jones: Will the Minister give way?

Dawn Primarolo: If my hon. Friend will wait a moment, I will give way to her.
	These are hardly the actions of a Government who do not care about those on low incomes. As I have said, we must contrast our record with that of the Conservative party when in government.
	I know that I should return to the clause before you reprimand me, Mr. Gale. I will give way to my hon. Friend and then return directly to the clause.

Lynne Jones: The question is whether those who cannot afford to buy shoes for their children, to use the Minister's example, should be paying tax at all.

Dawn Primarolo: If my hon. Friend will bear with me, I will come to indexation, the Rooker-Wise amendment and the true cost to families in each tax bracket.
	Clause 28 freezes the personal allowances for those under 65. Along with the freeze on the national insurance threshold, that will raise 700 million for the Exchequer next year and 850 million the year after, helping to fund the increase in investment in the national health service. It spreads the burden of contributions wider than simply being placed on earners. As I have said, clause 29 will extend the age-related personal allowances for those aged 65 or over beyond indexation.
	Conservative Members oppose the clause. They made great play of ignoring the Rooker-Wise principles. I took the precaution of reading the debate that took place in 1978. It is a very important debate, and I hold both hon. Members who moved the amendment, especially the late Audrey Wise, in great respect as regards their intentions in doing so. In the debate, Audrey Wise made it clear that a Government who were freezing the allowances would have to come to this House to explain why automatic indexation was not taking place. That is exactly what we are doing in relation to this year. We are not talking about indexation having gone for ever, but about what happens as result of this Budget.
	As the hon. Member for Yeovil (Mr. Laws) pointed out, Conservative Members showed no hesitation and expressed no worries about the poor when they froze personal allowances in 199394, nor when they did it again in 199495. They were not freezing allowances, as are this Government, to use the money to spend on investment in public servicesquite the reverse. Hon. Members may recall that I reminded the right hon. Member for Charnwood (Mr. Dorrell) that his Government's Budget in 1994 cut 10 billion from public expenditure. The Conservatives were paying the cost of economic failure. The breathtaking argument advanced by the hon. Member for Fareham (Mr. Hoban) was that we should not be raising any more tax because the economy was looking quite goodwe should just borrow more if we wanted to invest. That would be a return to exactly the policies that got the last Conservative Government into such a dreadful mess.
	Conservative Members said that they were concerned that the increase meant that higher rate taxpayers would pay more.

Michael Jack: The Paymaster General rightly drew our attention to the fact that a decision had to be taken about the suspension of the Rooker-Wise amendment, and said that the Committee would require an explanation. So far, she has announced that a sum of money is being raised and told us what it will be used for, but she has said neither why that particular mechanismthe freezing of the allowancewas the chosen vehicle for raising the money, nor what others were rejected.

Dawn Primarolo: If the right hon. Gentleman will be patient, I am coming to that. I am trying to deal with questions in sequence rather than making my comments, then answering all the questions at the end out of sequence.
	The Chancellor made it clear that he believed, based on the Beveridge principles, that all members of the community should make a contribution to increases in spending in the public sector. I shall give the figures so that hon. Members know exactly what we are talking about before their imaginations run riot. The changes resulting from freezing the allowances will be equivalent to 28p for the starting rate taxpayer, 49p a week for the basic rate taxpayer and 80p a week for the higher rate taxpayer. Surely, Conservative Members do not expect us to believe that 80p a week will force millions of people into the upper rate tax bracket. Of course, that is not so, as they know full well. Freezing personal allowances I absolutely acknowledge that that is the impactspreads the burden of the contribution widely, as the Chancellor wanted to do in line with the Beveridge principles. Those on the lowest incomes will be greatly assisted by the interaction between the family tax credit and the working tax credit, to the point where there will be no extra charge to them.
	Great play was made of the higher rate of income. The higher rate threshold is 34,515 in 200203. That hardly qualifies as a low income. The Government have considered where to raise the money for investment in first-class public services. We are increasing non-health spending by 2.5 per cent. in real terms in 200405 and 200506. We want to place the national health service on a sustainable long-term financial footing, as do all members of our community. We are increasing the UK's health spending by 7.4 per cent. a year in real terms over the next five years, and by more than 40 billion between 200203 and 200708. My constituents and people I meet on the doorstep tell me that they are prepared to invest that money in their health service. They do not say, Our incomes are lower, so we don't want to make a contribution.
	My hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones) asked about people on low incomes. I remind her that 50 per cent. of families with children are better off in terms of actual income and will be better off as a result of the improved quality of the health service when the investment is made. Single people aged 25 or over working 35 hours a week on a minimum wage are better off and will have access to improved public services. Because of the tax and benefit reforms that we have made since 1997, the poorest fifth of families will on average be 2,400 a week better off[Interruption.] I am sorry. They would love me to say that, but I think that the Chancellor would have something to say about it. They will be 2,400 a year better off as a result of our changes, better public services and higher investment. If we said to those people, You are not to contribute even a small amount to your health service, even though you have vastly improved your financial position as a result of this Government's investment in your future, they would find that bizarre, as they would find it bizarre to hear hon. Members suggesting that they are not prepared to pay.

Edward Davey: Of the number of people on low incomes who are being brought into the income tax net as a result of the freezing of personal income tax allowances, what proportion will gain from the Government's tax credit policies and what proportion will not benefit at all?

Dawn Primarolo: I shall be very careful in giving the answer, because I do not want to mislead the Committee on that matter, and I will check carefully whether I have answered the hon. Gentleman correctly.
	The working tax credit, the child tax credit and the pension credit, linked to the minimum income guarantee for pensioners, the 200 a year allowance for heating and the changes that we have made to indexation for over-65s[Interruption.] The hon. Gentleman knows that people on low income do not represent just one group. Presumably, he is expecting me to deal with the income of each and every group where there may be people on low incomes. The combination of all the measures I mentioned ensures that the very lowest incomes continue to increase the most. The hon. Gentleman can confirm that by studying the distributional impact charts in the Red Book and by talking to his hon. Friend the Member for Yeovil, who is a member of the Select Committee on the Treasury, one of whose recommendations dealt with the matter.
	The right hon. Member for Fylde made many interventions; the final one was to point out that we should do more about avoidance. That is rich coming from a party that tells us that we are introducing too much complexity and red tape to the tax system, while telling us that people who should pay tax are not doing so, even though when the Conservatives were in government they did nothing about that problem. If the right hon. Gentleman examines the Finance Bill, he will see that closing avoidance loopholes will raise 740 million next year and more than 1 billion in the following year, ensuring that those who try to avoid tax are encouraged to pay it.

Michael Jack: The hon. Lady should consider her words carefully. She said that the previous Conservative Government did nothing about avoidance. She might remember that the last Finance Bill before the general election in 1997 included a range of measures that built on previous initiatives on the issue. We can debate their effectiveness in another place at another time, but the Conservative Government took action on many aspects of avoidance and the hon. Lady knows it.

Dawn Primarolo: The right hon. Gentleman referred specifically to VAT. I do not mind debating the record of his Government or scrutinising it, but I do not recall that they ever made an assessment of the problems of VAT fraud. I certainly remember that they got their forecasts wrong; there was one year when 6 billion of VAT receipts disappeared and could not be accounted for[Interruption.] The right hon. Gentleman specifically raised VAT avoidance and I stand by what I have said. I do not recollect that his Government undertook the assessment that we have made, nor did they publish either figures or strategies as we have done under the able stewardship of my right hon. Friend the Financial Secretary.
	For all the reasons that I have giveninvestment in public services, ensuring a fair contribution, an understanding of the decision to freeze allowances this year for the under-65sI commend the clause to the Committee.

Question put, That the clause stand part of the Bill:
	The Committee divided: Ayes 257, Noes 187.

Question accordingly agreed to.
	Clause 28 ordered to stand part of the Bill.

Clause 29
	  
	Personal Allowances for 200304 for those aged 65 or over

Question proposed, That the clause stand part of the Bill.

Howard Flight: The clause, as hon. Members are aware, raises the question of age-related personal allowances. I want to draw attention to two issues, aspects of which I am not sure that the Government have fully taken on board. As a result, many pensioners with an income below the national average will have no benefit whatever from the increased allowances. In particular, almost 1 million with modest pensions for which they have saved for years, and whose earnings are about 75 per cent. of national average earnings, will be short-changed.
	The first issue is that the restrictions clawing back the age-related allowances are not being indexed or increased. The Government have failed to point that out, as one might have expected. As the Committee will be aware, if a retired person's taxable income exceeds 17,900 per annum, he or she loses 1 of age-related personal allowance for every 2 of income above that sum. Those with an income of 21,980 per annum have no age-related allowance. Those who still qualify for the married allowance are in a similar position, as that allowance will not increase.
	Why are the Government not increasing the level at which the age-related personal allowance is clawed back? Surely it is wrong for pensioners with incomes below the national average wage to have their personal allowances restricted, especially when the Government have made so much of wanting to do their best for pensioners.
	The second issue on which I want to concentrate is that of certain forms of insurance saving. Again, the Government make their point about wanting to increase pension saving and people's savings for old age, but when people cash in United Kingdom-based with-profits income bonds, the sum realised is treated as income for tax purposes even though those involved may not have any immediate tax liability because they are only standard rate taxpayers. The effect is that people with modest incomes will lose their age-related allowances for the year in which they realise those savings for their old age.
	As I have said, pensioners with incomes of 21,980 have absolutely no additional allowance, yet their incomes are 1,000 below the national average. As Age Concern has said, many older people with modest incomes will not benefit from the higher age allowances, yet the expenditure of people in retirement is often increasing faster than the rate of inflation. The 10 per cent. council tax increaseit is often considerably morehas hit pensioners quite hard. Obviously, pensioners may have to pay nursing home costs for themselves or for their partners or spouses, and those costs are rising substantially faster than the rate of inflation.
	I object to the Government's making a great noise as usual in saying what wonderful things they are doing for pensioners, given that, as with last year, many people in the middle and pensioners with incomes below the national average will not benefit at all. The arrangements have been structured in a sufficiently devious fashion so that they will receive no increase in their personal allowances in 200304.
	Will the Government consider whether it is reasonable, in principle, for the threshold at which the age-related personal allowances are withdrawn to be indexed, together with other personal allowances? If we really want people, especially the vast bulk of people in the middle, to save more for their old agewe all know the Government's target for the ratio of public to private pension provision to swing from 60:40 to 40:60tax rates in retirement are material.
	I repeat the essential point, but I also ask the Paymaster General whether the Government have focused on the fact that many in retirement who are not enjoying large pensions will not benefit from the much-boasted, double-inflation increases in age-related allowances. Was that the Government's intention, or is it an oversight? Why did the Government not consider increasing the ceilings at which the age-related personal allowances are withdrawn?

Edward Davey: In part, I want to support what the hon. Member for Arundel and South Downs (Mr. Flight) just said. Many of his points were valid, particularly his point about the needhe did not say it in these words, but it was the implicationto top-slice relief for people who cash in insurance bonds, as they often exceed the age-related allowances and are hit unfairly. I very much agree with him in that respect.
	I want to focus on age-related allowances as they affect married couples. There is room for a very modest measure to be introduced in Committee or in next year's Budgetthis is an early Budget representation for next yearto sort out the allowances for married elderly people to make them less complicated. Currently, there is a difference in the married couples allowance for people aged 65 as opposed to those aged 75. It is a small difference, but it seems odd that there should be two different allowances for those two different groups of pensioners. It creates an unnecessary complication, and, by spending tiny amounts of money, the Government could level up the age 65-to-75 allowance to the higher rate for those aged 75 and over. That would achieve simplification and benefit some pensioners in a small way. I put that down as a marker, as the Government could consider such a proposal in the Standing Committee or in next year's Budget.
	The clause itself is welcome. The fact that the age-related allowance is being increased over and above indexation is welcome, just as the failure to index the personal allowance for those under 65 was not welcome. I should have thought that the clause would receive support on both sides of the Committee, but there are several other smaller measures, as the hon. Member for Arundel and South Downs and I have tried to suggest, that the Government could consider to push in the same direction as the clause.

Dawn Primarolo: The clause increases the pensioner allowances for those who are 65 and over. It complements our policy of tackling pensioner poverty and rewarding those pensioners on modest incomes who have saved a little for their retirement. From April, the poorest households, who are on the minimum income guarantee, are at least 20 a week better offover 1,000 a year in real termscompared with 1997. We will increase, throughout this Parliament, the minimum income guarantee in line with earnings, which means that the poorest pensioners will share in rising prosperity thanks to the Government's successful handling of the economy.
	In addition, from October 2003 the pension credit will replace the minimum income guarantee and provide pensioners with a guaranteed minimum income of at least 100 a week for single pensioners and 154 for couples. It will reward those whose second pensions, savings or earnings give them income of up to about 135 a week for single pensioners or 200 for couples. We have also increased the basic state pension beyond the rate of inflation. For a single pensioner, the rise will be 3 a week this April and that is on top of 5 increase last April. In 2003, the full basic state pension will increase by at least 100 for single pensioners, and in the future it will always increase by at least 2.5 per cent.
	As I have already said, we are setting the winter fuel allowance payment at 200 for the rest of this Parliament. There is also additional help for households with someone who is aged over 75. They will continue to receive free television licences.
	On taxation, in the last Parliament we increased pensioner allowances beyond inflation, very much recognising the point that was made in earlier debates about pensioners being on fixed incomes and facing other pressures. We then created and extended the 10p tax band. However, we wanted to do more for those pensioners who pay tax. In 200304, we will increase the pensioner allowance to 6,610 for someone aged 65 to 74 and by another 240 over indexation for those who are over 75. That will come to 6,740 on current forecasts.
	The higher allowances will benefit 1.4 million pensioners and will take about 170,000 of them out of tax altogether. The basic rate pensioner taxpayer will gain up to 85 per year and we will subsequently increase the allowances at least in line with earnings for the rest of this Part. As one would expect, that is very much in line with our manifesto commitments.
	The hon. Member for Kingston and Surbiton (Mr. Davey) raised an issue that he has raised powerfully in the House on several occasions. He referred to the importance of continuing to look critically at the way in which the tax system affects pensioners and of considering every opportunity, as we have done, to remove pensioners from the tax system whenever that is possible. When the tax system impinges on their income, we should continue that quest. I am therefore happy to accept the hon. Gentleman's representations for next year's Budget in the spirit in which they were offered. In particular, he identified the issue of the married couples allowance, which was protected for those over 65 when the Government removed it in a previous Budget as we prepared the way for the tax credits.

Adam Price: I would like clarification. If I understand it correctly, both pensioner age groupsthe 65-to-74 cohort and those aged 75-plushave been over-indexed, but they have been dealt with slightly differently by the Bill. A precise figure is stated for the 65-to-74 group, but indexation-plus applies to the other group. Will the Paymaster General explain the reason for that?

Dawn Primarolo: For the over-75s, there is indexation plus an extra 240. That is in recognition of the particular pressures and expenditures that older pensioners face, in the same way that we provided free television licences for people aged 65 and over. We have debated that problem many times. Although the Committee is only considering the taxation system, the Government's reforms to support pensioners attempt to tackle the wider problems that they experience. In particular, we hope to increase the income of those on the lowest incomes as rapidly as possible and ensure that the money that we spend has a greater impact on the income of pensioners on lower pensions.
	For the over-75s, indexation occurs in September. We promised to ensure that no pensioner aged 65 or over would pay tax on their income if it is less than 127 a week. We are setting the monetary amount to ensure that we deliver on that promise. The answer to the hon. Gentleman's question relates to the connection between statements that were made in the House, the September date for indexation and the announcements in the pre-Budget report. We are fulfilling the pledges made in the House.
	The hon. Member for Arundel and South Downs (Mr. Flight) mentioned the tapering away from the upper limit of the benefit of the allowances. No elderly person pays more tax than a younger person would with exactly the same income. In fact, the reverse is true. Retired people who are aged 65 and over tend to pay less tax on the same income as someone who is in work, which relates to the protection of fixed income.
	The hon. Gentleman knows that the purpose of the age-related allowance is to give extra help to those aged 65 and over who rely on relatively modest incomes. That is why the allowances are given in full only to those whose income does not exceed a certain limit. The limit for 200203 is 17,900. Abolishing that limit would cost the Government 420 million and would benefit only the very wealthiest 10 per cent. of pensioners. I understand the hon. Gentleman's point, but this Government and preceding Governments have thought it right to retain the income limit and to concentrate the extra benefits of the allowances on elderly people with modest incomes.
	The income limit is indexed for 200304. The Government have tried to protect the position, but I will not conceal the fact that that type of expenditure on the wealthiest 10 per cent. of pensioners is not justified in our opinion.

Howard Flight: I did not suggest that the tapering away should be abolished. My concern relates to the way in which it operates. Many pensioners who are on below average incomes will not benefit from the increase in the older person's personal allowance. I am glad to hear that the limit at which the tapering away applies will be indexed because I confess that I was not entirely clear that that was the case. I hope that the Minister is correct. At the very least, it seems that indexation is fundamental. I was focusing on those with incomes below the average because the costs of living of the elderly tend to have a higher inflation rate than those of the mean citizen.

Dawn Primarolo: All pensioners on incomes of up to 22,000 will benefit from this measure, and that amount is higher than the median earnings of a single person, which are 21,400, so the position is protected and the situation is not as acute as the hon. Gentleman might imagine for those on modest incomes. The changes that he suggests would benefit only the wealthiest 10 per cent., and the cost is not justified, given their substantial incomes compared with those of people who earn less and still contribute.
	That point addresses one made earlier by the Liberal Democrats. They said that we are letting the wealthiest pensioners off the hook. If the hon. Member for Kingston and Surbiton looks at how indexation operates, he will see that that is not quite the case.

Edward Davey: rose

Dawn Primarolo: I shall give way to the hon. Gentleman once more, and then I want to conclude my remarks.

Edward Davey: Moving on from the point that the Paymaster General has been debating with the hon. Member for Arundel and South Downs (Mr. Flight), will she provide clarification? The clause sets the personal allowance for those aged 65 and 74 at 6,610. I have been looking through the notes on clauses to find what the allowance would have been set at if the clause had not been included in the Billin other words, under pure indexationand I could not find the amount. Will the Paymaster General tell the Committee what that figure is? It is clearly a lower amount, because on page 14 of the Red Book the cost of over-indexation of age-related allowances for those aged between 65 and 74 is set at 55 million for 200304, but I cannot find the exact figure.
	I have a second question. We are being told in the clause the personal allowance for those aged 75 and over will be determined by the indexed amount plus 240, but in table 1.2 in the Red Book I cannot see any figure for the cost of that policy for the over-75s. Does the Paymaster General have a figure for that?

Dawn Primarolo: I hope that the hon. Gentleman will excuse me if I do not give him those figures right now. I do not have them at my fingertips. He knows that I am not feeling quite on form this evening, so if he will forgive me I will make sure that I respond later to those points. If he preferred to ask for those figures in a parliamentary question, I could answer him that way, or I could write to him. I shall certainly look into the matter. The Government have made commitments to protect income at a certain level, and we are using different methods to achieve that. There is no intention to use smoke and mirrors.
	The final point made by the hon. Member for Arundel and South Downs concerned life assurance policies and any gain from them. We take the view that a gain on such a policy is income like any other income, and the age-related limit applies. The gain comes into the income that will be taken into account when calculating tax over the limit. That is how we are proceeding. Committee members must strike a reasonable balance. We must ensure that pensioners on modest fixed incomes are protected in the best way possible without creating exceptional rules that seem to imply that once someone is over 65 all the tax system's rules on gains on income do not apply. There is no reason to move away from that argument.
	The proposals in the clause have been widely welcomed by Members on both sides of the House and by pensioners. I shall look carefully at points made by hon. Members to ensure that our aim is delivered and consider whether anything further needs to be scrutinised. I commend the clause to the Committee.

Howard Flight: I do not wish to detain the Committee for long, but the Paymaster General did not quite understand my argument. I was not proposing that there should be an abolition; I was merely asking her to look at the level at which age allowance restrictions are removed. I may be wrong, but my understanding is that the 17,900 limit has not gone up, which is a fundamental issue. I understand that average earnings are about 23,100; all age-related allowance is lost at 21,980, which is 1,000 or so below average earnings. I was focusing not on better-off pensioners, but on the rump of people in the middle and suggesting, if I am right about the figures, that they are getting a slightly raw deal.
	Question put and agreed to.
	Clause 29 ordered to stand part of the Bill.

Clause 87
	  
	Extension of Power to Give Effect to Double Taxation Arrangements

Question proposed, That the clause stand part of the Bill.

Howard Flight: Clause 87 is a technical measure, designed to provide a useful power for Britain to enter into tax treaties with non-recognised territories. Taiwan has been cited as the jurisdiction where it will be most useful. The enabling provision on tax treaties is section 788 of the Taxes Act 1988, which is one of the measures being addressed or tinkered with. Has the opportunity been taken to make quite sure that it gives proper authority to all aspects of existing treaties as well as the proposed change?
	In the past, the Inland Revenue has acknowledged that section 788 has shortcomings. In practice, there may not be a serious problem, but in principle it is less than desirable to enter into treaties without adequate statutory authority in the United Kingdom. I seek confirmation that, in looking at changes to section 788, the Government are satisfied that they have addressed the Revenue's concerns about its shortcomings.

Teddy Taylor: I hope that the Minister will forgive me. She has always been very courteous to me, but she knows from the exchanges that we had in the Treasury Committee, before I was chucked off it, that I have the gravest suspicion about everything that she does.
	I have a simple question about the reason for changing the words
	made with the government of any territory
	to
	made in relation to any territory.
	The next clause, which of course we cannot discuss now, contains regulations that provide for different cases with respect to different territories. The clause states:
	The territories to which this section applies as respects an accounting period . . . are those specified as such in regulations.
	I am horrified because I gain the impression that the Government are asking for the power to apply different rules to different territories. There is no definition of how the territories will be selected, and there is no definition of what rules will apply. The Minister is aware that I am extremely concerned, for example, about what the Government are doing in relation to the Channel Islands. The policy that they seem to be adopting towards one of the Channel Islands seems to differ from the policy that they are adopting towards the others.
	What worries me in particular is the fact that the Government are asking for blanket powers to bring in regulations that will apply to any place that they want, without ensuring that the same rules are applied to all territories. That strikes me as very worrying and not in the traditions of the House

Roger Gale: Order. With respect to the hon. Gentleman, I think that he will find that he is speaking to clause 88, not to the clause currently under discussion.

Teddy Taylor: I would not think of taking up the time of the Committee. I was giving an example to illustrate my simple question about the reason for substituting the words
	made in relation to any territory
	in clause 87 for the words
	made with the government of any territory.
	I shall, of course, say a few words on clause 88 if I have the delightful opportunity of catching your eye, Mr. Gale, but I should like to know why the words are to be substituted and what the aim is.

Dawn Primarolo: The clause amends the legislation that enables double taxation agreements to be implemented. In particular, it removes the existing requirement that the agreement is made with the government of the other territory. The other territory is the countrythe jurisdiction.
	The hon. Member for Arundel and South Downs (Mr. Flight) asked whether we were confident that the proposed wording was correct. I am confidently advised that the wording is correct, but the hon. Gentleman is right: if it were not correct, we would not have the authority to enter into a double taxation treaty, for which the clause provides. I assume that the wording is right, because I have been advised that it is right.
	The purpose of the change is to enable legal effect to be given to a double taxation agreement in relation to the territory of Taiwan. The agreement must be made between two representative officesthe British trade and cultural office in Taipei, and the Taipei representative office in London. It was formally signed in London by the heads of those offices on 8 April 2002. The agreement will be laid for consideration by the House at the earliest convenient opportunity after the passing of the Bill.
	The reason that we need to change the wording is specifically to enable us to have an agreement with Taiwan. Other countries have taken similar powers in order to do that. Australia, New Zealand and the Netherlands have all implemented double taxation agreements with Taiwan, which were made between their representative offices and the Taiwan representative office in each country. The change is necessary because Taiwan is part of the People's Republic of China. It is one of our most important trading partners in Asia, and a double taxation agreement will provide considerable benefits to British companies trading in Taiwan, and will also serve to encourage Taiwanese investment in the United Kingdom. It is necessary to make changes in order to retain the internationally recognised definition of the Government, and to reach an agreement with the representatives of Taiwan.

Teddy Taylor: Is the Paymaster General suggesting that Taiwan has no Government? My understanding is that it has a democratically elected Government, while the People's Republic of China does not. Why on earth is the Paymaster General removing the word government? Is she making a concession to the People's Republic of China and, if so, what is the purpose of that concession? What is wrong with the existing words, given that Taiwan has a splendid Government, who are democratically elected and respected throughout the civilised world?

Dawn Primarolo: I have already answered that question. To my knowledge, Taiwan is not recognised by any Government. Other Governments have double taxation treaties for precisely the reasons I have given. If the hon. Gentleman thinks that the rest of the world is wrong in terms of its diplomatic relations with that part of the world, he is entirely entitled to hold that view; but the international agreements require the reference to a Government to be changed to a reference to a representative office, so that the balance of agreements already in existence can be maintained and an agreement with Taiwan can be secured.
	That is all that the clause does. It is what many other countries have done. It is a welcome arrangement, which adds to the double taxation agreements that this country already hasmore than 100thus facilitating international trade and, in particular, the operation of our companies in countries where we have such agreements.
	Question put and agreed to.
	Clause 87 ordered to stand part of the Bill.

Clause 88
	  
	Controlled Foreign Companies: Territorial Exclusions from s.748 Exemptions

Howard Flight: I beg to move amendment No. 26, in page 63, line 14, at end insert
	'(6) A period of 6 months' notice shall be given prior to the laying of a statutory instrument, as provided for in subsection (5) above.'.
	This is essentially a probing amendment. It is intended to establish whether the Government are willing to consider relaxing the measures in clause 88. Conservative Members are extremely uncomfortable with the clause and its background. For reasons connected with the national interest, we are particularly unhappy about the fact that it makes Britain a marginally less attractive place for a multinational company to have its headquarters. It introduces a degree of uncertainty to the international structure of such companies.
	Clause 88 gives the Treasury an arbitrary power to designate territories where CFC exemptions for UK-based groups will be removed. Although I duly note that an affirmative resolution of the House is required, self-evidently the present Government have a majority that will make that little more than a formality.
	Let me say something about the background to the clause. I do not know why, but there was some misreporting of it in the press. It was said that the clause related to a disagreementshall I say?between the Paymaster General and Jersey on the savings directive, which threatened the deal allowing it to be an alternative to a common European Union withholding tax. Whether there is a disagreement is debateable, but the matter relates to the Primarolo report on EU unfair tax competition and not to the savings directive.
	The Committee may remember that the Primarolo report identified in EU member states, various British dependencies and elsewhere, what it considered instances of unfair tax competition that resulted, among other things, in particular locations getting business because of specific tax incentives. At the outset, EU members considered applying their code and principles to other key parts of the worldthe United States and Switzerland in particularon the basis of the sensible argument that not bringing them in would merely drive capital away from the EU and places like the British dependencies. As I understand it, that developed slightly later into an attempt by EU member states to get a commitment that the same measures would be introduced in British dependent territories, even though they are not members of the EU. In relation to key third territories, the concept was to try to promote the adoption of equivalent measures. I think that there was a slight change from the original intentions in that regard.
	As I understood itI remember reading the reportthe main offender was the Netherlands, which I think had 66 cases of allegedly unfair tax practices, while the British dependent territories of the Channel Islands and the Isle of Man had relatively few such cases. I recollect that the report stated that the UK would do its best to persuade its dependent territories to come into line with what was being introduced in the EU, but also made it clear the UK had limited constitutional powers and could do its best only within that framework.
	I understand that a week or so before the Budget announcementI think on 10 Aprila conversation occurred between the Paymaster General and the chairman of the Jersey policy resources committee, who is the senior politician in Jersey. In essence, the Paymaster General told that gentleman that if Jersey did not sign up within a week to the EU code of conduct on unfair tax competition, the UK would introduce options for putting economic pressures on Jersey to do so.

Dawn Primarolo: Will the hon. Gentleman explain whether he is merely repeating what has been alleged in the press or whether he has been told by the senator concerned that that was the content of our conversation? He needs to be clear on the matter, because if he wants to pursue that route, there will be a sharp dispute between us about what was said and when. If he is repeating what was reported in the press, perhaps he could say so.

Howard Flight: I thank the Paymaster General for those comments. In fact, I recollect press reports that had nothing to do with the matter, but were all about the savings directive. The document that I have is the EU tax package statement by the gentleman in question to the Senate in Jersey, and I shall refer to some points in that statement.

Dawn Primarolo: May I ask the hon. Gentleman not to read from the document selectively? The senator whose statement to the Jersey Parliament the hon. Gentleman is talking about referred to the fact that discussions went on between Jersey and the United Kingdom for some two years.

Howard Flight: I am aware of that, and I will be referring to those discussions, which went on for some time. I am sure that the Paymaster General may be able to elucidate a little further what those discussions were about. In commonsense language, as I understand the situation, there were discussions with the various dependent territories, particularly with regard to exempt companies; the Jersey authorities were less co-operative than the Guernsey and Isle of Man authorities and sought to negotiate terms, because the administration of companies forms a larger proportion of the Jersey gross domestic product than it does elsewhere.

Dawn Primarolo: Perhaps the hon. Gentleman would like to explain whether his speech is intended to defend the UK interest, or Jersey's interests.

Howard Flight: rose

Teddy Taylor: Before my hon. Friend responds to that intervention, will he point out that Jersey has no representative in the House of Commons to speak for it?

Howard Flight: I will come to the UK interest, but it is important to raise the matter, partly for the reason that my hon. Friend has mentioned and partly because in some senses the British dependencies are part of British interests. If, as a result of clause 88, we end up damaging our own self-interest, that will not be particularly sensible. [Interruption.] May I continue? It is healthy that this matter should be out in the open, particularly where, for some reason, what appeared in the press, particularly the Financial Times, was far from what the matter was all about.
	The Paymaster General's discussions with Jersey were also about what the Organisation for Economic Co-operation and Development has been concerned with in the territories. It is interesting to note that roughly a year ago the United States Government changed policy and broadly made the point to the OECD that it was not entirely proper to over-interfere in the internal tax affairs of sovereign states. I would be interested to know whether the United States change of policy was acknowledged by the Government here, and what the opinions about that were.
	To deal with the Jersey matter, my practical point is that it is in the UK's interest, no matter how difficult it may be, to resolve British policy objectives directly with Jersey. It is unfortunate that the resulting power that the Paymaster General has introduced in clause 88 does not relate specifically to the Government's disagreement with Jersey. It has a much wider application.
	I realise that the Paymaster General may seek to talk about precedent, but as I said at the outset, under clause 88, a UK-based multinational will face the arbitrary possibility that the exemption rules applying to controlled foreign companies, on which basis it may have structured itself, could suddenly change if the Government choose to use the powers in clause 88. As a result, its CFC exemptions would be suspended.
	The amendment would provide a cooling-off period, and introduce the concept of giving six months' notice of an intention to bring forward such legislation. One hopes that that would force agreement between the UK and the relevant dependent territory, and it would also enable UK-based multinational companies to examine their global structure and to change it, having been given notice of such legislation by the UK Government.
	I finish by returning to the Jersey issue, and Jersey's responseas I understand itto the Paymaster General, following the famous telephone conversation in which Jersey was required to commit. The key clause states:
	We have said clearly to the Treasury that, subject to safeguarding our vital economic interests and to a clear level playing field, we shall take the Code of Conduct principles into account in our review of fiscal strategy and also examine whether we can address the Directive by adopting measures that are the same as, or equivalent to, those set out in it. We have emphasised that in any event we recognise the wish of EU Member States to limit as far as possible any circumvention of the Directive, if or when it comes into force, and that accordingly we shall not allow Jersey to be a place outside the EU where EU residents could avoid paying their due taxes. As my letter to the Minister makes clear, we want to reach an agreement with the UK on the Tax Package and we are ready and willing to enter into constructive discussions to that effect. The progress of our fiscal strategy review makes that now timely.
	It would be in the UK's and London's interests if the UK and Jersey could reach an agreement here. It is unfortunate that the Government have resorted to the instrument constituted by clause 88, which has a wider application than merely the specific discussions with Jersey.

Edward Davey: I rise so that we can return the debate to amendment No. 26. I have some sympathy with it, but its implications have not been explored in recent moments.
	The explanatory notes and Budget press notices do not offer sufficient explanation of, or justification for, clause 88, so the Government need to offer some. The Committee needs to be aware that it would empower the Treasury to make regulations that would affect companies' commercial decisions overnight. One assumes that such regulations would not be retrospective, and it would help if the Paymaster General could confirm that.

Howard Flight: rose

Edward Davey: I shall give way to the hon. Gentleman, provided that he is not going to talk about Jersey.

Howard Flight: I did make the point that the measures would in effect be retrospective. If a group has a structure or its CFCs in a certain jurisdiction, but it is suddenly decreed that CFC exemptions are not valid there, that is effectively retrospective.

Edward Davey: The hon. Gentleman is redefining the term retrospective with that argument. It is a concern, but not in the way that he suggests. My concern is that the clause gives the Government the opportunity to produce an instrument to change the rules on CFCs at any stage during the financial year. Governments in the past have been able to do so every year in the Budget and the Finance Bill. Every year, the Government get their sticky fingers on the tax statutes and change the law. All companies and individuals know that the tax regime may change in the next financial year. That degree of instability is built into the system and we cannot get around that unless we stop having annual Finance Bills. That might be a good idea, but I would be ruled out of order for pursuing it. However, the clause would build in extra instability over and above the annual Finance Bill. That is the concern, and the Government have yet to make the case that the power is necessary between annual Finance Bills.

Teddy Taylor: I hope that the Minister will reconsider this important issue. This clause does not mention the Channel Islands, just as the previous clause did not mention Taiwan. I had the pleasure of having breakfast in Portcullis House last week with senators from Jersey who explained their concern about the provision. I should point out that I paid the bill, so there is no question of anything unusual.
	The senators had several concerns. The Minister will be aware that it has been widely reportedthe senators who spoke to me confirmed itthat those involved had been told to agree to the code of conduct, lest economic sanctions be levied against them. I am sure that the Government will deny that shameful behaviour. However, the clause contains unusual wording that would horrify Members, especially Labour Members who claim to believe in democracy, if they read it. Clause 88 states that regulations may be introduced that
	may make different provision . . . with respect to different territories.
	In other words, there might be one rule for Jersey and another for a different country. That should worry us all.
	The regulations may also
	contain such incidental, supplemental, consequential or transitional provision as the Treasury may think fit.
	So we would be giving the Government a blank cheque to introduce whatever measures they think fit, subject to the approval of regulations. They could bring in different rules for different countries or places.
	I hope that the Minister will accept that the Channel Islands have some of the highest standards of financial operation to be found anywhere in the world. We had a recent report on money laundering in which the Channel Islands were not even mentioned as being suspected of involvement. The Channel Islands are also the second major source of capital for London finances. Surely the Government should be concerned to try to preserve that.
	As the Minister is well aware, the code of conduct that she initiated in the EU, among all the nonsensical talk about a withholding taxit cannot happen unless Britain agrees to ithas meant that we are stuck with forcing the Channel Islands to do something that they do not want to do. It will be much against their financial interests. If the Minister doubts that, she should speak, as I have, to senators from Jersey who are very concerned, worried and alarmed. The Minister may argue that the people of Guernsey are not suffering, but she will probably know that they have a very different sort of business from that carried on in Jersey.
	Why is the Minister introducing this measure? Why does she want the power to bring in different regulations to apply to different countries? The Minister may say that the circumstances are different, but surely a law should be applied fairly and squarely. Many of us who care about Britain and the high standards that have been maintained here are worried that the Channel Islands will be undermined by the code of conduct that has been introduced. The Minister may remember that she said at the time that the code was not available, but I was able to get hold of a copy. My hon. Friend the Member for West Worcestershire (Sir Michael Spicer) is present, and he will recall that I obtained a copy simply by telephoning Brussels for one.
	Will the Minister explain why the Government want the power to bring in regulations that will apply to different places in different ways? The Channel Islands do not belong to the EU, and have always had the right to make their own decisions on taxes. Can the Minister assure the Committee that there is no question that the Channel Islands will be subject to sanctions, and that no pressure will be applied, under the clause, to force them to do something that they do not want to do and that they do not consider in their interests?
	Finally, Britain's interest in the EU obliges us all to do many things that we do not want to do. The Minister may remember that we spoke about the Bank of England being forced to sell gold, but the price today is $309 per ounce. The price at which we sold means that Britain has lost hundreds of millions of pounds. Ministers either seem uninterested, or they say that there is nothing to be done.
	I know that it would be out of order to go beyond the clause. However, the powers in the clause have never appeared in legislation before. They would allow provisions to be applied differently in different areas. We have treated the Channel Islands in a shameful manner that is against the interests of Britain and the world. The provision is also against the interests of those who believe in maintaining high standards of financial conduct in the financial world.

Dawn Primarolo: I shall begin by explaining the provisions of clause 88. The clause provides for a reserve power to make regulations specifying overseas jurisdictions in which controlled foreign companies would automatically fall within the charge to tax made by the controlled foreign company rules.
	The aim of the measure is to protect the UK's economic interests and tax base against harmful tax practices where they continue to be prevalent. It reflects the Government's determination to promote fair tax competition and to take effective action where jurisdictions do not remove the harmful features of their tax regimes. It will not be used where appropriate action is being taken by jurisdictions to remove harmful tax practices.
	I shall explain the parliamentary process involved and the precedents; finally, I shall explain what will happen next.
	Regulations specifying a jurisdiction would require the express consent of Parliament. The regulation-making power is subject to the affirmative resolution procedure, so no jurisdiction can be designated unless and until the House votes through regulations to that effect; only then would the tax rules for controlled foreign companies be affected.
	The controlled foreign companies rules are designed to stop UK companies reducing their UK tax liabilities by diverting profits to subsidiaries situated in low-tax regimes. The rules work, broadly, by charging UK parent companies of controlled foreign companies on an amount equal to the profits that would otherwise avoid tax.
	At present, there are a number of specific exemptions from these rules that exclude from their effects the vast majority of overseas subsidiaries of UK companies. The measure would give the reserve power to make regulations to exclude from these exemptions companies that carry on business in the designated jurisdiction and would, in effect, bring them into UK tax charge.
	We have introduced this measure because, although much progress has been made towards eliminating harmful tax practices, we must be able to take effective action against jurisdictions that do not remove them in order to afford more protection for the United Kingdom tax base. Those are the obligations of Ministers and, I should have thought, of all Members.
	It is the responsibility of Governments to protect their tax base, and by taking this action we signal that we are serious about our desire to see the United Kingdom's interests protected. The Government strongly support international initiatives aimed at curbing harmful and anti-competitive tax practices. In particular, that means encouraging our dependent territories to co-operate fully with the two key initiativesthe code of conduct and the draft directive on taxation of savings, which are contained in the European tax packagethat are so crucial to the City of London.
	The United Kingdom has committed itself to promoting the principles in the code. We believe that our dependent territories should match up to the highest international standards and be part of international efforts to ensure fair tax competition. As major offshore financial centres, they depend on the health of European economies.
	We will all benefit if there is strong and healthy competitionbut only if the competition is fair and not simply predatory. This measure provides the Government with a reserve power to take considered action, with the full authority of Parliament, when such action is necessary to protect the tax base and the United Kingdom's economic interests.

Denzil Davies: I think that we all understand the purpose behind the legislation. Is it not a legitimate concern that, as I understand it, under the reserve powers the tax rates of companies can be increased in the middle of a financial year by secondary legislation?

Dawn Primarolo: If such a regulation were sought from the House, it would become effective at the company's next accounting period, whether it was in January or April. It is not retrospective.
	The Government hope that, by negotiation, agreement will be achieved. However, there have been a number of occasions in the past when the United Kingdom has taken defensive measures against other jurisdictions to defend its economic interests and tax base. For example, the United Kingdom terminated two double tax treaties, with the British Virgin Islands in 1971 and the Dutch Antilles in 1988. Both treaties were terminated to defend United Kingdom interests.
	In 1985, with the full support of the then Opposition, the Conservative Government secured provisional powersthe same type of reserve powers as theseto act against unitary taxation, specifically directed at California. Section 812 of the Taxes Act 1988 allows the Treasury to make an order prescribing a unitary state, and is still on the statute book.
	There are strong political, economic and historic ties between the dependent territories and the United Kingdom. In many cases, that relationship contributes strongly to their undoubted success as offshore financial centres. However, mutual responsibility cuts both ways, and it would be highly unrealistic and irresponsible to expect us to allow them to enjoy the benefits without contributing to the way forward.
	On the comments that have been made about Jersey, let me give hon. Members one example. There are about 19,000 exempt companies in Jersey. They pay a charge of 600that is allwhich means that they have to pay no tax at all on their income on profits arising outside Jersey. Moreover, at the moment they are not taxed anywhere else. It does not seem unreasonable that we should, as part of the international debate about tracking terrorist finance, dealing with money laundering, addressing fair tax competition and eradicating niche regimes, expect to advance this argument with our dependent territories, and they are engaging with us on that.
	The UK dependent territories have the capacity and expertise to prosper without recourse to internationally damaging tax practices, and their reputations and long-term viability will be enhanced by their being part of these international initiatives. Guernsey's advisory and finance committee president, Laurie Morgan, was reported only two weeks ago as sayingas have those in other dependent territoriesthat he was confident that the industry would be able to adapt to any changes implemented as a result of adopting international standards. No dependent territory is being asked to do anything that the United Kingdom would not do. No dependent territory is being asked to move first or to change its system without others in the international framework doing the same. No dependent territory is being asked to do anything apart from engaging on a level playing field, helping us to take forward initiatives whereby all of us will prosper.
	The amendment would put back by six months the best interests of the United Kingdom economically and in defending its tax base. The provisions in the reserve power provide, first, for the Government to introduce regulations and, secondly, for that to be debated in the House: only then will the matter be acted on. I say to the hon. Member for Kingston and Surbiton (Mr. Davey) that no retrospection is involved. If the regulations were requiredI hope that they will not be, but the UK must be strong in signalling its intention to defend itselfthe earliest date on which they could be made is that of the passing of the Bill. If regulations become necessary, they will specify exactly what they are doing, and no power within them can be retrospective. The UK is defending its economic interests and its tax base, sending a clear message to all jurisdictions about how we will conduct ourselves in the international field.

Teddy Taylor: The Minister mentioned money laundering as one of the reasons for the regulations. Is she aware that the recent report on upholding money laundering issues throughout the world specifically excluded the Channel Islands altogether?

Dawn Primarolo: I used money laundering as one example of international practices that were improving. The regulations will tackle harmful tax competition and predatory tax regimes that seek to undermine legitimate fair tax competition; they have nothing to do with money laundering.
	I call on every Member to vote for the best economic interests of the United Kingdom, to defend its tax base, to support the clause and to reject the amendment because it would deny us those opportunities[Interruption.]

The Temporary Chairman: Order. I remind the Committee that a debate is under way.

Howard Flight: As I pointed out, the amendment was, in essence, a probing one. The Government have taken excessive powers, but I beg to ask leave to withdraw the amendment.
	Amendment, by leave, withdrawn.
	The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendment proposed thereto, forthwith put the Question, pursuant to Standing Order No. 68, That the clause stand part of the Bill.
	Question accordingly agreed to.
	Clause 88 ordered to stand part of the Bill.
	To report progress and ask leave to sit again. [Dan Norris.]
	Committee report progress; to sit again tomorrow.

Eric Forth: On a point of order, Madam Deputy Speaker. The parliamentary day is drawing to a close and, yet againunless you are able to tell us to the contrarywe have had no indication from the Secretary of State for Transport, Local Government and the Regions that he wishes to come to the House, to make an apology, to make a statement or, indeed, to offer his resignation. Can you give us any information, Madam Deputy Speaker, as to whether you have received an approach from the Secretary of Stateeven at this late hourto honour the House with his presence, to purge the contempt for the House that he has shown hitherto, and to allow the House to question him and hold him to account, as is our duty?

Madam Deputy Speaker: I must inform the right hon. Gentleman and other Members that I have not received any communication from the Secretary of State or anyone else. The right hon. Gentleman is an experienced Member and I am sure that he is well aware of a very well-tried method of obtaining informationhe may wish to pursue it at the earliest opportunity.

Douglas Hogg: Further to that point of order, Madam Deputy Speaker. Will you clarify this point? Is it not usual, when the shadow Leader of the House rises to make a very serious point of order, for the Leader of the House to be present to listen to it? The right hon. Gentleman, who is the custodian of the traditions of the House, could at least communicate to his right hon. Friend the Secretary of State for Transport, Local Government and the Regions how angry the House is about his conduct.

Madam Deputy Speaker: In the absence of any information being given to the Leader of the House about the point of order, I should not expect him to be present.

Crispin Blunt: Further to that point of order, Madam Deputy Speaker. A headline on Ceefax tonight stated that the Secretary of State had been in discussions with Mr. Speaker. Can you give the House any information about that?

Madam Deputy Speaker: I have to inform the hon. Gentleman that I am in no way responsible for whatever appears on Ceefax.

Julian Lewis: Further to that point of order, Madam Deputy Speaker. Will you take this opportunity to reaffirm the guidance given to me and other new Members of the 1997 intake by Speaker Boothroyd that, as Members, we enjoy the privilege of being able to say what we like in the House without suffering the risk of defamation proceedings? Do you agree, Madam Deputy Speaker, that if a Secretary of State has not only misled the House but has defamed an individual in the way that Mr. Sixsmith was defamed, the individual is entitled to expect a withdrawal in the House and for his name to be cleared?

Madam Deputy Speaker: I have already ruled on that and given my response to the right hon. Member for Bromley and Chislehurst (Mr. Forth).

John Gummer: On a point of order, Madam Deputy Speaker. Mr. Speaker said earlier in the Session that he was concerned to ensure that announcements would be made to the House and not outside. Therefore, I put it to you that on this occasion this is a matter about which the Chair ought to be concerned, for an announcement was made outside the House about the proceedings in the House. Would it not therefore be appropriate for the Chair to make inquiries as to when this might be remedied here, in this Chamber?

Madam Deputy Speaker: I have absolutely no doubt that Mr. Speaker, if he is not aware already, will read Hansard tomorrow. I remind all hon. Members that I have already made a suggestion and ruled on this matter. If there are any points of order other than on that subject, I am prepared to take them.

Eric Forth: In view of the gravity of this matter, Madam Deputy Speaker, and in view of the fact that the Secretary of State is apparently unwilling voluntarily to come to the House, may I give notice that Her Majesty's Opposition will tonight table a motion of censure on the Secretary of State?

Angela Browning: On a point of order, Madam Deputy Speaker. If a Member of the House accuses another Member, particularly a Minister, of misleading the House, the procedures that you would exercise are very clear, unless the Member immediately withdraws the accusation; so, from the point of view of Members of the House, especially Back Benchers, the procedures are clear. However, if the House is misled by Ministers there seems to be absolutely no redress. The imbalance in our procedures becomes clearer with every event such as this that passes, so I hope that you, Madam Deputy Speaker, will discuss this with Mr. Speaker as a matter of urgency.

Madam Deputy Speaker: I have already suggested to the shadow Leader of the House the route that is available to any Back Bencher, but I will see that the hon. Lady's comments are drawn to the attention of Mr. Speaker.

PETITION
	  
	Personal Benefits (Long-stay Patients)

Bob Laxton: I wish to present to the House a petition in the name of 3,769 constituents from the Derby patients council and residents of Derby. It declares
	that the present level of personal benefit allowance for long-stay patients drops to 14.50 per week after 52 weeks in hospital; and that this is grossly inadequate and demeaning for people whose home is a hospital.
	The Petitioners Therefore Request that the House of Commons urge the Government to introduce legislation to immediately double the allowance to 29 per week, and to review the aspect of this benefit system with the aim of ensuring that all long stay patients receive a level of allowance which meets their needs.
	And the Petitioners Remain, etc.
	To lie upon the Table.

ASTHMA

Motion made, and Question proposed, That this House do now adjourn.[Dan Norris.]

Jimmy Wray: I should like to draw attention to the seriousness of the incidence of asthma throughout Britain. I have spent a great deal of time trying to get this subject debated in the House; I raised it with the Leader of the House and asked him to give time for a debate, but unfortunately there was other important business to deal with.
	I also raised the issue with the Minister of State, Department of Health, my hon. Friend the Member for Redditch (Jacqui Smith), to try to find out some relevant statistics and how much has been spent on research. In a written reply, she said that she did not have those statistics because they were not collected centrally. However, the British Thoracic Society has done a great deal of research on health service expenditure, and it reckons that respiratory disease costs the health service about 2.5 billion.
	I am not saying that I am a great asthma expert, but many men and women, mothers and fathers, brothers and sisters and sons and daughters have spent a great deal of time worrying about members of their families who have become emergency patients in many hospitals throughout the country because of their asthma.
	This is the National Asthma Campaign's national asthma day in Scotland, and yesterday was national asthma day in England. The campaign is involved in a worthwhile cause, and it is guided by the hands of the chief executive, Liz Brodie, whose son has suffered from asthma for 25 years. I would like to do justice to the campaign's cause. It has reported on many occasions to many other committees and has sent speakers across the country.
	The National Asthma Campaign's report Sleepless Nights, Anxious Days, which was launched today, analyses the incidence of asthma throughout the United Kingdom. We have to focus on younger children first when we talk about asthma, as 1.5 million children in the United Kingdom alone have the illness. One in five children have been diagnosed with asthma at some point and one in eight have asthmatic symptoms. Nationally, more than 7,000 children visit their GPs every week to be treated for asthma for the first time. The United Kingdom has the highest rate of severe wheeze in the world for those aged 13 and 14. Those are very serious statistics.
	A recent World Health Organisation report found that asthma in young children can be more damaging than tuberculosis and the human immune deficiency virus. That finding is extremely serious. Let us not forget that in the past we screened people for tuberculosis in Scotland and throughout the United Kingdom because of the number of lives that were lost to that disease. That is why we want the Government to focus on asthma in the United Kingdom and why I would like them to put it at the top of their list of health priorities, as the situation is likely to get worse, not better.
	Triggers for asthma range extremely widely from cigarette smoke and cat fur to vehicle exhaust fumes, and there are many other causes. In such an unpredictable environment, I am sure that everyone would agree that children must get the best possible care and support. Although deaths from asthma in childhood are rare, the fact remains that asthma encroaches on the lives of many people and, unless it is manageable, it can cause undue stress and discomfort.
	I want to give an idea of the impact of asthma nationally. Every 16 minutes a child is admitted to hospital because of asthma. Many of those children go through accident and emergency units, which, as I am sure everyone would agree, can be inhospitable places for children. Often, a frightening environment for children is unwittingly created. I would welcome, as would many people, measures to reduce asthma triggers in the environment, including measures to control smoking in public places and cat pollution.
	I tabled an early-day motion on asthma and schools, which more than 100 Members have signed. It raises the important issue of the application of medication and knowledge of the condition in schools. In that early-day motion I reiterate my point that parents who have children with asthma must feel comfortable to leave their children in the hands of teachers and staff at schools. On average, there will be up to four children with asthma in each classroom. In my constituency, approximately 12,000 people have asthmathe majority are children. Too often, teachers do not have the training or knowledge about asthma, and could be wary when administering medication or not know what to do when a child has an attack. One parent told me that
	the school just didn't want to take the responsibility, they just didn't know what my son needed and he was not allowed to carry his inhaler with him.
	I take such comments very seriously, as children with asthma must be allowed immediate access to their medication. Locking it away in a cupboard somewhere in the school does not necessarily provide easy access. Children in reception and preparation classes may not understand their condition fully. It can be very frightening for young children to experience attacks, and it is important that their supervisors know what to do.
	I tell all those who do not consider asthma a serious condition to imagine what not being able to breathe properly and struggling to take each breath feels like. In that type of situation, young children will panic, and the condition can worsen. Supervisors must provide a calming influence and not panic. Under the Health and Safety at Work, etc. Act 1974, local education authorities, or school governors in the case of independent schools, are responsible for ensuring that schools have a health and safety policy.

John Robertson: I thank my hon. Friend for securing this debate. I have been an asthma sufferer since birthI carry an inhaler aboutand I have a daughter who has also had asthma since birth. Does he agree that not only do we need to educate teachers and parents but we must do extensive research into why children suffer from asthma from birth?

Jimmy Wray: The Government have been doing a great dealthey spent in the region of 130 million on Smoking Kills, a lung disease programme, in 1998. I am very grateful to my hon. Friend for his acknowledgement of that issue.

Alex Salmond: I have been asthmatic all my life. When I was young, I participated in several schemes for new treatments such as broncho-dilators. At that time, in the 1960s, sensitivity tests were available that easily identified the substances to which people were allergic, which are among the causes of asthma. My understanding is that those tests are no longer available because they were subsidised by drug companies, and when generic drugs were introduced the companies no longer subsidised the tests. Now people must do a much more difficult blood test to identify allergic substances. Does the hon. Gentleman agree that it would be useful if such tests were once again available under the national health service, particularly for young people, to identify easily the substances to which people are allergic so that they can take the obvious preventive action?

Jimmy Wray: One of the recommendations for which the National Asthma Campaign has been fighting is testing. It wants testing to be carried out because it reckons that it will save money for the health servicethat 2.5 billion could be put to a better use.
	Another important consideration for the Department for Education and Skills is provided by the Department of Health's 1996 guidelines on supporting pupils with medical needs in schools. The National Asthma Campaign has discovered that almost half of local education authority schools are without an active asthma policy. My early-day motion has called for all local education authorities to have asthma policies. Although we cannot turn teachers into asthma specialists, such policies would at least ensure that they can spot symptoms and provide medication quickly.
	The National Asthma Campaign's school asthma pack has been tried and tested and, what is more, it takes only 10 hours to implement. I would welcome legislation making mandatory the 1996 Department for Education and Employment guidance on support for pupils with medical needs. In March 2002, my right hon. Friend the Secretary of State for Education and Skills pledged to contact all schools and local education authorities to remind them of the guidance issued in 1996. However, to the best of my knowledge, that is yet to take place.
	The report Sleepless Nights, Anxious Days does not ask for a massive increase in finance, but offers a pragmatic approach and easy solutions. Asthma is seen as an invisible disease and it is not taken as seriously as some other conditions. One mother told me that, if her child were in a wheelchair, people would be more supportive.
	I must raise an important point about diagnosis. A woman will often take a child who is wheezing and gasping for breath to the GP and the GP will simply say something like, Oh, he has got asthma, give them an inhaler and pack them off without much explanation. Such practice must stop. GPs must divulge more information about the condition to the parents and to the children to ensure that they know what exactly is involved. I have spoken to a number of my constituents and I am now convinced that, to enable the 1.5 million children with asthma to lead a normal life, their carers and health professionals need to have more ready knowledge and access to information.
	Parents of children with asthma do not ask for any more from public services than any other family with a sick child. Surely, it is reasonable to ask for a minimum standard of care, so that those parents can at least be confident of receiving the support that their child needswhether in general practice, hospital or at school. As agreed minimum standards of health care for people with asthma in the United Kingdom do not exist, the reality for the 1.5 million children with asthma is that the condition is not a priority for the national health service. I would be grateful if my hon. Friend the Minister could tell me why the Government are unwilling to establish a national minimum standard or make funding available to improve the health care of people with asthma.
	Perhaps my hon. Friend could respond to the calls for the introduction of a simple lung function or allergy test for asthma that could be carried out from an early age. That would allow for the right prescribed medication and put a halt to anxious parents continually bringing their children to GPs and thus creating more pressure on the health service.
	In conclusion I hope that the national service framework will include asthma; that minimum standards of asthma care will be established in the health service; that resources will be provided to primary care trusts to give priority to asthma; that legislation will be introduced to ensure that all schools implement an asthma policy; and that the Government will carry out more research into asthma in children to find out its causes and to find a way to prevent it.

Hazel Blears: I congratulate my hon. Friend the Member for Glasgow, Baillieston (Mr. Wray) on securing this Adjournment debate. I also thank other Members for their contributions. This is an extremely important subject for hundreds of thousands, if not millions, of people up and down the country.
	I welcome the debate, not least because it gives the Government an opportunity to state clearly our policy on asthma and to point out the wide-ranging work that is going on in research and to try to advise patients of the ways in which they can manage their condition. That work is increasingly successful.
	I recognise how distressing and debilitating the condition can be for individuals, their carers and their families. Asthma involves generalised airways obstruction that is reversible either spontaneously or by treatment. Its cause is not known and people can become asthmatic at any time. There are two major variants of asthma. Extrinsic allergic asthma can arise from hypersensitivity to allergens. Those can be everyday particles including grass pollen, house dust mite dung and pet fur. That condition often results in wheezing. It affects many people, especially those of a young age. The other type of asthma is known as intrinsic or non-allergic asthma. It often occurs in people in their 20s and 30s.
	Asthma is the commonest chronic disease in the United Kingdom and affects people across a range of age groups. There are no comprehensive data on the number of people with asthma, but it is estimated that it affects up to 3.4 million people in the UK, including 1.5 million children between the ages of two and 15. It is estimated that 4 per cent. of adults and approximately 5 per cent. of children suffer sufficiently severely to require medical intervention.
	About one in seven children have asthma diagnosed at some time and about one in 20 have asthma that requires regular medical supervision. It is clear from those figures that schools need to be aware of asthmawhat triggers an attack, how to prevent it and how it can be treated. My hon. Friend made the important point that if young children are not well prepared they can panic, which exacerbates the attack. It is vital to ensure that schools have the tools, the knowledge and the power to help children in those circumstances. That is why the Department for Education and Skills and the Department of Health jointly issued A Good Practice Guide, which is about supporting pupils with medical needs.

Jimmy Wray: I asked my right hon. Friend the Secretary of State for Education and Skills about the 1974 Act. She said that she wrote to all local authorities to encourage them to be prepared. Surely that Act legally binds them to be responsible for ensuring that the children in their schools get the medical treatment that they need.

Hazel Blears: Under health and safety legislation, schools are responsible for providing a safe environment for staff, pupils and anyone who uses the school environment, but they are not legally responsible for administering treatment. It is not possible under that legislation to put a legal duty on members of staff to provide medical treatment. Rather than putting staff in the position of administering medical treatmentwe must remember that they are members of the education staffwe have tried to give them enough confidence, skills, equipment and knowledge to help them to help the children.
	The matter is sensitive and it is important to get the balance of duties right. If we attempt to impose medical duties on non-medical staff who do not have the medical qualifications to carry out treatment, we could find ourselves in legal difficulties. I understand that my hon. Friend wants the guidance to be as strong as possible, but we need to take the staff with us on that. We do not want them to think that we are imposing a duty that they cannot fulfil. They need to be active partners in helping children to care for themselves and in ensuring that the facilities are available to them.
	We produced the good practice guide to encourage local education authorities and schools to draw up medical support policies, not just for asthma but for other conditions from which children might suffer. The guide is therefore not asthma-specific. Hon. Members will know about the rare and severe times when children have an allergic reaction to a product which requires the immediate administration of adrenalin products. We want to have a wide-ranging support mechanism to help school staff to help children.
	The guide includes a specific section on asthma. It states:
	Children with Asthma must have instant access to their reliever inhalers when they need them.
	My hon. Friend made that important point. The guide gives clear advice on the administration of inhalers. It states that pupils who are able to use their inhalers themselves should usually be allowed to carry them on their person. If the child is too young or immature to take personal responsibility for their inhaler, staff should ensure that it is stored in a safe but readily accessible place and is clearly marked with the pupil's name so that they know where they can get it as soon as the first signs of an attack come on.
	The guide says:
	Inhalers should also be available during physical education and sports activities or school trips.
	It also recommends, as good practice, that children should be encouraged to take responsibility for using their inhaler from the earliest possible age because the safest way to manage their condition is if they are in control.
	The guide stresses the importance of children with asthma being able to participate fully in all aspects of school life, including sport. Too often in the past children with asthma were discouraged from getting involved in physical activity, but it is important that they do as much as they can within the constraints of their condition. Many children can benefit from physical activity, but managing their condition carefully is important. Schools need to be aware that pupils may need to take their inhaler before joining in sporting activities, and they must be careful not to force children with asthma to take part in sport if they feel unwell. Again, we must strike the right balance between encouraging children to have as normal and active a life as they can and being conscious of the restrictions that their condition may impose.
	As well as advising staff what to do if a pupil suffers an asthma attack, the guide promotes the drawing up of individual health care plans for pupils with medical needs, which should include details of the pupil's condition, medication and named members of staff who are able to support them should anything go amiss. The guide recommends that there should be clear procedures, including the reporting of information about any medical conditions that children have.
	I understand that the National Asthma Campaign, which has been tremendously active in this area, produced a resource pack entitled Danger Zone, which highlighted all these issues. That has been disseminated to all local schools in our healthy schools network, and programme co-ordinators are making good use of those materials. Healthy schools are working in close conjunction with school nurses to ensure that children and their families get the right support.
	Although asthma has become more common in recent years, treatments have improved and the number of deaths has fallen. Since 1988, in England and Wales the number of deaths has fallen by about 25 per cent., but even so, in 2000, 1,272 people died from the condition, so we can see that it is very serious. Most deaths occur in middle-aged people, and there were only 14 deaths among young people aged 19 and under. Clearly, however, each of those deaths is a tragedy for the family, so asthma is extremely important to the Government.
	Management of asthma mainly takes place in primary care settings. Under the chronic disease management programme, GPs are paid and encouraged, in their contracts, to provide organised programmes of care and, at primary care level, proper clinics for patients with asthma. A recently introduced programme will have a significant impact. Hon. Members may already know of the expert patients programme, which is being developed for people with a range of long-term and chronic conditions, including asthma. This is an extensive programme whereby patients themselves are trained in managing their condition and given detailed clinical information about it. After all, it is the patients, who live day to day with chronic conditions, who are the real experts on their care. Often they know far more than consultants and doctors will ever know.

Alex Salmond: As the Minister knows, when people suffer from allergenic asthma, their allergies can change very quickly indeed. Is there a medical reason why sensitivity tests are no longer available on the NHS, or is it merely a matter of cost? I find it distressing that my young constituents do not have access to a simple test that I had access to in the 1960s, which was invaluable in stopping asthmatic attacks by allowing me to avoid the substances to which I was allergic. Why are not those simple tests available now, whereas they were available 30 years ago?

Hazel Blears: I entirely understand the hon. Gentleman's point, and I was going to come to that. I was not aware that the tests were available in the 1960s, and I certainly do not know why they are no longer availablewhether the reason is cost or a technicality. I would have hoped that we could make clinical advances rather than moving in the opposite direction. I do not know whether these were good, clinically effective tests, so I shall explore the clinical basis for withdrawing them. I am happy to look further into the matter, not only for the hon. Gentleman but for the National Asthma Campaign, and I shall also respond to the points made by my hon. Friend the Member for Glasgow, Baillieston about the history of this matter.
	As I was saying, the expert patients programme will help us to make big strides towards progress. I am delighted that the programme has 26 pilots on a range of conditions up and down the country. The Medway primary care trust has a pilot specifically on asthma. The area has a disproportionately high accident and emergency admission rate for asthma in childhood; far too many children have attacks and are admitted to A and E. Many of those admissions could be avoided through improved self-management by expert patients. The fact that Medway has a pilot on something that particularly affects the community is extremely encouraging. Evaluating the evidence from the pilot to see if the expert patient programme can reduce the crisis in asthma will be extremely interesting and valuable for the NHS.

John Robertson: What kind of research is going on in respect of children who have asthma before they are even born, and what kind of money are we putting into that?

Hazel Blears: I am happy to say that extensive research is going on. The Medical Research Council is the main body carrying out research on the Government's behalf, but we also work closely with the National Asthma Campaign to look at why asthma is caused in the first place and to investigate links between air pollution, traffic pollution, the environment and asthma. The National Asthma Campaign is funded to the tune of 5 million a year to carry out research on the Government's behalf; it is innovative of the Government to use experts to conduct research in the field via that voluntary organisation. That is a priority for the Government, even though we have not had any breakthroughs on isolating the causes of asthma. Much of our attention has centred on alleviating people's symptoms, but research into causes is equally important and we want to try and achieve a clinical breakthrough.
	Members have asked whether or not asthma would be subject to a national service framework.

Jimmy Wray: Over the years, have Health Secretaries or Education Secretaries ever been in contact with Transport Secretaries? I read an important article in The Independent which said that most asthma cases are caused by exhaust fumes.

Hazel Blears: That is a subject of ongoing dialogue. In 1995, a committee reported on the medical effects of air pollutants. There was little evidence that air pollution causes asthma, although it was accepted that exposure to air pollutants could worsen the symptoms of asthma. Again, the issue is about causes rather than the exacerbation of the disease, but we do not have strong evidence. It has been conjectured that modern fuels are more polluting than those used in the past, but there is no hard evidence of a direct causal link. One would expect there to be more asthma in urban communities where there is more traffic than in rural communities but, interestingly, there is no difference between the two; the link is clearly not as established as one might think from anecdotal evidence.
	The national service framework for children will use asthma as an exemplar; it will not investigate specific diseases, but it has chosen to concentrate on asthma as an illustrative example. I reassure Members that right across the board in research
	The motion having been made after Ten o'clock, and the debate having continued for half an hour, Madam Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
	Adjourned at twenty-one minutes to Eleven o'clock.